Trump Hints at Higher Auto Tariffs to Boost US Plant Investments

US President Donald Trump indicated that tariffs on imported automobiles could increase soon, a move aimed at encouraging automakers to expand domestic production. “I might go up with that tariff in the not too distant future,” Trump said during a White House event. “The higher you go, the more likely it is they will build a plant here.”

Trump’s comments follow recent announcements of US investments by major automakers, despite escalating costs tied to tariffs imposed during his administration. Currently, imported automobiles are subject to a 25% tariff.

This week, General Motors announced a US$4 billion investment in three US facilities, alongside plans to shift some SUV production from Mexico. Hyundai also revealed a US$21 billion investment in March, including a new steel plant in the United States.

“They would not have invested 10 cents if we did not have tariffs, including for manufacturing American steel,” Trump said, adding, “American steel is doing great.”

However, automakers continue to lobby the US government to ease the 25% tariff. GM, Ford, and Stellantis—collectively known as the Detroit Three—have raised concerns over a recent agreement that reduces tariffs on British auto imports while maintaining higher rates on vehicles produced in Mexico and Canada.

Mexico reported last month that vehicles assembled in the country for the US market would face an average tariff of 15%, not 25%, due to credits for US content in the vehicles.

The financial impact of tariffs remains a significant challenge for automakers. In May, Ford estimated that tariffs would reduce its adjusted earnings by approximately US$1.5 billion. GM reported a total tariff exposure of US$4 billion to US$5 billion, including about US$2 billion in duties on entry-level vehicles imported from South Korea, such as Chevrolet and Buick models.