Union says carmakers should absorb Trump’s 25% tariff on imports

A union representing U.S. autoworkers cheered President Donald Trump’s 25% tariffs on auto imports and foreign parts while encouraging Congress to force vehicle makers to take the tax hit from consumers. 

Trump on Wednesday announced the 25% tariff on vehicles built outside the U.S. along with a 25% tariff on imported auto parts.

The 25% tariff applies to imported passenger vehicles, light trucks and auto parts. It also includes processes to expand tariffs on additional parts “if necessary,” according to the White House. 

Importers of automobiles that fall under the United States-Mexico-Canada Agreement will be able to certify their U.S. content, and the 25% tariff will only apply to the value of non-U.S. content.

USMCA-compliant automobile parts will remain tariff-free while the secretary of commerce and U.S. Customs and Border Protection establish a process to apply tariffs to the non-U.S. parts, according to the White House.

United Auto Workers, a union that represents 400,000 active members, lauded the tariffs as Trump prepares to roll out broader protectionist trade policies.

“We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities for decades,” UAW President Shawn Fain said. “Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today’s actions.” 

Fain said automakers should return union jobs to the U.S.

“These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country, and it is now on the automakers, from the Big Three to Volkswagen and beyond, to bring back good union jobs to the U.S,” he said. 

The White House expects the auto tariffs to generate $100 billion in federal revenue. Trump said he hopes to eventually bring in $600 billion to $1 trillion in tariff revenue in the next year or two. Trump also said the tariffs would lead to a manufacturing boom in the U.S., with auto companies building new plants, expanding existing plants and adding jobs.

UAW said vehicle makers should take the tax hit rather than passing it to consumers. It encouraged Congress to take legislative action to make sure the companies don’t pass on added costs to consumers.

“As they shift their supply chains and investments to the U.S., auto companies that have enjoyed years of record profits should absorb the cost of these tariffs rather than passing them on to consumers, and the UAW would support legislative or regulatory action requiring them to do so,” the union said. “Workers must be held harmless during any disruption that accompanies the reshoring process, with financial support from the federal government if necessary.”

Autos Drive America, which represents 12 international automakers with operations in the U.S., said the tariffs will result in higher prices and fewer choices.

“The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S.”

Nearly half of all cars sold in the U.S. in 2024 were imported, according to industry data. Americans bought about 16 million cars, SUVs and light trucks last year. About 50% were imports. The White House said that of the 8 million vehicles assembled in America and not imported, the average domestic content was estimated at 50%.

Cox Automotive Chief Economist Jonathan Smoke said Wednesday tariffs on Mexican and Canadian parts would add on average $3,000 to the cost of building a new car or truck in North America. The 25% tariff on vehicles assembled outside the U.S. would add $6,000 to the cost.

“The massive policy changes by the administration have been far more aggressive than anyone expected so far,” Smoke said during the media call. “And worse still, the administration has communicated that they are willing to see the economy deteriorate if that is necessary to accomplish their goals.”

The American Automotive Policy Council, representing American automakers Ford, General Motors and Stellantis, said the tariffs must be structured to avoid higher prices.

“U.S. Automakers are committed to President Trump’s vision of increasing automotive production and jobs in the U.S. and will continue to work with the Administration on durable policies that help Americans,” President Matt Blunt said. “In particular, it is critical that tariffs are implemented in a way that avoids raising prices for consumers and that preserves the competitiveness of the integrated North American automotive sector that has been a key success of the President’s USMCA agreement.”

The average listing price for a new vehicle in February was $48,316, down 0.6% from a month earlier and higher by 2.6% compared to last year. However, 82 models on the market are priced at $40,000 and below, and 31 sit below the $30,000 mark, according to a report from Cox Automotive.