Trump announces plans to impose 25% auto tariffs on April 2

US President Donald Trump on Wednesday announced plans to impose 25 percent auto tariffs — on top of previous duties — on April 2.

"What we're going to be doing is a 25 percent tariff for all cars that are not made in the United States," Trump said in the White House Oval Office.

"We're signing today. It goes into effect on April 2. We start collecting on April 3," Trump told reporters.

According to a document released by the White House, Trump signed a proclamation invoking Section 232 of the Trade Expansion Act of 1962 to impose a 25 percent tariff on imports of automobiles and certain automobile parts to address "a critical threat to US national security."

"The 25 percent tariff will be applied to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks, as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components), with processes to expand tariffs on additional parts if necessary," the White House said.

It also noted that importers of automobiles under the United States-Mexico-Canada Agreement will be given the opportunity to certify their US content, and the 25 percent tariff will only apply to the parts that are not made in the United States.

The current US tariff on automobiles is generally set at 2.5 percent, while a 25 percent tariff is imposed on light trucks. Vehicles that meet the rules of origin under the US-Mexico-Canada Agreement (USMCA) are exempt from these tariffs. According to the latest announcement, the 25 percent tariff will be added on top of existing duties.

Trump claimed that the tariffs would encourage more production to relocate to the United States, generate new revenue for the government, and help reduce the national debt. However, economists believe the tariffs will drive up car prices and hurt consumers, who are already facing high prices.

"This is a major blow to the auto industry. Ford and GM shares are down sharply," Gary Clyde Hufbauer, a non-resident senior fellow at the Peterson Institute for International Economics, told Xinhua.

"The higher cost of autos cut demand, especially since consumers are in weak shape financially," Hufbauer said. "I expect substantial job losses in US auto and parts firms."