As trade talks with China continue and the United States seeks to renegotiate its position in global commerce, Donald Trump has once again turned up the heat on the auto industry. The former president has hinted at raising import tariffs on foreign cars beyond the already steep 25% threshold—a move intended to compel automakers to shift more production onto U.S. soil.
The existing 25% tariffs on imported vehicles and automotive components, imposed during Trump’s previous administration, were meant to protect American workers and industries. But Trump’s recent comments suggest that this figure may not be the ceiling.
“To further defend our auto workers, I imposed these 25% tariffs on all foreign cars and investments in American production. Production is going up across the board,” said Trump. “I might raise that tariff in the not-so-distant future. The higher you go, the more likely it is that they [automakers] will build a plant here.”
The timing of these remarks is far from coincidental and reveals a larger strategy aimed at reshaping the global manufacturing map—starting with the automotive sector.
Battle on multiple fronts
Trump’s renewed focus on tariffs comes as part of a wider conflict with the State of California. His administration recently struck down a state law that aimed to ban the sale of internal combustion engine vehicles by 2035, sparking a legal response from California Governor Gavin Newsom. The state is now suing Trump, challenging his authority to impose sweeping tariffs and nullify environmental legislation.
These legal and political tensions reflect a deeper divide between state-level environmental goals and Trump’s industry-first approach, which favors deregulation and aggressive protectionism.
The broader implications of Trump’s tariff rhetoric are already rippling through international markets. After introducing the new tariff regime in April, the U.S. reached an agreement with the United Kingdom in May. The deal allowed a set number of British-made cars to be imported under a reduced 10% tariff rate, in exchange for improved market access for American companies in sectors like food, pharmaceuticals, and digital services.
Now, with the EU in the crosshairs, Trump’s threat of raising auto tariffs adds pressure to ongoing negotiations with Europe. The message is clear: cooperate on broader trade concessions, or face steeper barriers to the lucrative U.S. market.
Trump’s approach is rooted in a desire to localize vehicle production and strengthen American industrial self-reliance. However, realizing such a shift requires time, massive investment, and above all, political stability. Sudden and sweeping changes to tariff policy can discourage long-term planning and strain relations with key allies.
As the global automotive industry grapples with electrification, digitalization, and supply chain transformations, this new layer of uncertainty could prove costly—especially for manufacturers navigating the complex web of international production and sales.
For now, the threat of higher tariffs hangs over the auto industry like a sword of Damocles. Whether it will succeed in reshaping production geography—or simply fuel trade tensions—remains to be seen.
