DONALD Trump has slapped a whopping 25 per cent tariff on all foreign-built cars in a huge blow to global car manufacturers.

The US President has said the car tariff, which will go into effect on April 2, will lead to a “tremendous growth in the auto industry”.

The United States stands as one of the largest automotive markets for numerous international car manufacturers, such as Japan’s Toyota, Honda, Nissan, Mazda, and Subaru. These companies are now facing significant challenges.

This also includes the UK, which exported £6.4 billion worth of cars to the US in 2023 – accounting for 18.4 of all the UK’s car exports.

Making the announcement, Trunpo said from inside the Oval Office: “This is the beginning of Liberation Day in America.

“If you build your car in the United States, there will be no tariff.”

Asked if there was anything carmakers could do to have the tariffs removed, Trump replied: “This is permanent, 100 per cent.”

Trump has extended his punishing trade war to now impact the entire world as fears grow for key UK industries.

Tariffs are taxes charged on goods imported from other countries, and are typically put in place to make domestic products more competitive.

This situation entails that any firm eager to sell vehicles manufactured in the UK to the US market must endure an additional 25 percent charge on top of the vehicle’s price.

The added cost might partially or fully be transferred to consumers, resulting in higher prices for these imported vehicles and making US-manufactured cars appear relatively more affordable.

The White House expects the tariffs to raise $100 billion in revenue each year, although there are fears of a financial squeeze on automakers who depend on global supply chains.

Many American carmakers source their components from around the world, and it could mean they face higher costs and lower sales.

President Trump has argued, however, that the tariffs would lead to more factories opening inside the US as company’s would look for ways to avoid the tax.

However, there are concerns of how this will impact consumers in America as well as manufacturers across the world.

Economist Mary Lovely, senior fellow at the Peterson Institute for International Economics has warned vehicles prices will rise as a result of the tariff.

The US president also previously announced 25 per cent tariffs on all steel and aluminium imports coming into the US – with the EU already hitting back hard.

Trump’s tariffs are now set to have a huge impact on the UK steel industry.

They have already warned that the decision to impose a transatlantic trade war “couldn’t come at a worse time”.

The UK Business Secretary has described the decision to impose global tariffs on steel and aluminium as “disappointing”.

Jonathan Reynolds added that “all options” are on the table to respond in the national interest.

The British government has already said they don’t want to retaliate and would rather come to an amicable solution.

Chancellor Rachel Reeves announced last week that tit-for-tat tariffs only risk slowing down the whole global economy.

She said she didn’t think tariffs “serve anyone well”.

Adding, “We don’t want to see tariffs. I will continue to make the case with all my international counterparts for free and open trade.”

Despite the UK staying firm in their hopes for a peaceful resolution, the European Union has already announced a huge two-stage retaliation against the US, which will cover €26 billion in EU exports.

From April 1, the European Commission says it will reimpose tariffs in response to Trump’s global tariffs.

This will have a direct impact on many iconic American brands, such as Harley-Davidson.

Then, from mid-April, further countermeasures will be applied if EU member states all approve.

European Commission President Ursula von der Leyen said today, “We deeply regret this measure.

“Tariffs are taxes. They are bad for business and even worse for consumers.

“These tariffs are disrupting supply chains. They bring uncertainty to the economy.

“Jobs are at stake. Prices will go up. In Europe and in the United States.

“The European Union must act to protect consumers and business.”

They added that any decision can always be reversed if the Trump administration is ready to “find a negotiated solution”.