US to impose 25% tariff on all car imports; steel sector hopeful for boost

US President Donald Trump on March 25 ordered a 25% tariff on all car and light truck imports starting on April 2, and a similar tariff on auto parts starting on May 3.

The US Steel industry hopes the tax on imported cars will boost production at a major customer. Steel demand from the US automotive sector was very weak in 2024, and steelmakers say that slowing the flow of imported cars will lead to a rebound in domestic demand for automotive steel.

"What we're going to be doing is a 25% tariff on all cars that are not made in the United States," Trump told reporters on March 25.

Mexico, Canada and South Korea currently have no tariffs on automobile shipments to the US, while all other countries have a 2.5% tariff on passenger cars and a 25% tariff on light trucks. Trump's newly announced tariffs will be additive to any existing tariffs and include no exemptions for any country, according to the White House.

"This is for the automobile industry, and this will continue to spur growth like you haven't seen before I was elected," Trump said. "If you build your car in the United States, there is no tariff. And what that means is a lot of companies are going to be in great shape because they've already built their plant, but their plants are underutilized."

US steel manufacturer Cleveland-Cliffs said March 24 it was shutting down steel production at its Dearborn, Michigan plant due to weak demand for automotive steel. Cliffs said it believes Trump's policies would reinvigorate US automotive production, allowing it to restart production at the plant.

Hyundai Steel said March 25 that it plans to start up a 2.7 million mt/year steel mill in Louisiana by 2029.

Canada reacts

Canadian Prime Minister Mark Carney announced on March 25 a C$2 billion strategic response fund to support the Canadian car industry against Trump's tariffs.

"It will fortify the entire Canadian auto supply chain, from raw materials to finished vehicles," Carney said.

Carney's Liberals plan to build an "all in Canada" network for auto manufacturing components, Carney said. "That will help insulate us from President Trump's trade threats."

Canada supplies most of US aluminum consumption, but Carney now sees cross-border trade as a weakness in a protracted trade fight with the US.

Reciprocal tariffs next

"And we have a big day coming up next week. Next is liberation day, and that's going to be on the second [of April], and that's going to be reciprocal [tariffs]. And I think people will be impressed," Trump said.

The Trump administration had previously said it planned to implement tariffs that match other countries' tariffs on the US starting on April 2. Trump said March 26 that the US would follow through on the pledge.