Following a 90-day pause on country-specific tariffs for negotiations, announced in early April by Donald Trump, the US President has now come back to the issue by sending letters to several states outlining results from the three-month period.
The suspension was supposedly ending on July 9. However, Trump extended the deadline to August 1 to give countries nearing a deal a bit more time for negotiations.
In these letters sent to other countries, the President gave notice of new rates — either agreed-upon duties from negotiations or higher tariffs for countries that didn’t make a deal.
On late Thursday, Trump stated on a NBC News interview that the rates for these states could reach as high as 20%.
The President showed that he has moved on from tensions with China and instead threatened to impose a 35% tariff on Canada.
Trump announced an even higher rate — 50% for Brazil imports. The tariff was motivated in part by the trial of former Brazilian President Jair Bolsonaro, an ally of Trump, which the U.S. President considers is unfairly being judged.
The 90-day pause led to only two completed deals — with the UK and Vietnam.
For the UK deal, the U.S. agreed to a quota system: the first 100,000 British vehicles can enter without tariffs, and after that, any additional vehicles will face a 10% tariff (instead of 25%).
According to Politico, the U.S. Administration is maintaining its 10% baseline tariff on goods imported from the European Union.
Despite the EU’s requests, it has not backed down on politically sensitive industries such as vehicles, steel, or pharmaceuticals.
The bloc, which aims to reach an agreement by August 1, has told Reuters that auto tariffs were a “red line” for the EU.
The two sides have discussed options like cutting tariffs, setting import limits, and giving credits based on the value of European automakers’ U.S. exports, according to the report.
However, these credits could benefit certain automakers in spite of others. Mercedes-Benz and BMW export a large portion of the vehicles they make in the U.S., while Volkswagen‘s U.S. production is mainly for the domestic market.
On Thursday, Volkswagen became the latest automaker to allegedly suspend U.S. deliveries due to the high tariffs imposed on auto imports.
According to a report by AFP, the brand suspended deliveries of its electric minivan in the country, the ID. Buzz, over a “technical recall.”
However, Volkswagen insiders told German media outlet Handelsblatt that the main reason was the U.S. 25% tariff on imported vehicles and auto parts, imposed by Donald Trump in early April.
Earlier this year, Geely-backed Polestar, which is headquartered in Sweden but produces its vehicles mainly in China, suspended orders of its Polestar 2 sedan in the U.S.
The company also suspended its yearly guidance, citing the 25% tariffs as a cause of concern.
Even Detroit automaker Ford struggled adapting to the tariffs, despite CEO Jim Farley’s optimism as he constantly remembered that the company and the Trump Administration had been working together on a solution to the tariff issue.
“The administration knows Ford’s a bit different,” Farley stated on an interview with CNN earlier this year. “We’re all trying to figure this out to do the right thing for the country and it’s going to take a little time.”
“But we never left the U.S. I guess that’s my point. We just never left,” he added.
In May, Ford told its U.S. dealers that it was raising prices on three of its Mexico-produced models — the Mustang Mach-E, the Bronco SUV, and the Maverick pickup.
Despite saying that they have “not passed on the full cost of tariffs to our customers,” a Ford spokesperson told Reuters that the price hike was due to usual mid-year alterations “combined with some tariffs we are facing.”
The brand’s domestic production stands at 77%, while 23% of vehicles and auto parts are mostly imported from Mexico and Canada.
General Motors, also headquartered in Detroit, currently builds 52% of its vehicles sold in the US at domestic facilities, while 30% come from Canada and Mexico and 18% from other regions.
Earlier this year, U.S. Commerce Secretary Howard Lutnick said that “USMCA [United States-Mexico-Canada Agreement] parts will not carry tariffs, no change in that approach.”
However, the situation is now unclear, as Donald Trump announced late Thursday that Canada will be facing a 35% tariff from August 1, blaming the next-door country of not helping “stop the flow of Fentanyl” in the U.S.
Auto parts that meet USMCA rules don’t have to pay the 25% tariff. But Canadian-manufactured vehicles that don’t qualify for duty-free trade under USMCA, containing parts that aren’t on the U.S. list, could have their tariff raised from 25% to 35%.
As of Friday, Tesla has reduced its Model Y prices in Canada by $20,000 — the refreshed model’s Long Range All Wheel Drive (AWD) version is available to order for C$64,990 ($47,450), down from C$84,990.
In the other side of the Pacific, negotiations with Japan and South Korea have gone south. Donald Trump announced a 25% tariff on imports from both countries, starting on August 1.
In mid-April, Japanese media outlet Nikkei reported that Japan was considering easing auto safety rules for imported vehicles, as part of ongoing negotiations with the United States.
According to a Truth Social post by Trump, who had sat in the negotiations between the two countries, it had been ‘A Great Honor to have just met with the Japanese Delegation on Trade. Big Progress!’
In 2024, American-made vehicles accounted for less than 2% of the auto market in the Pacific island.
Some of the reasons for the low imports included vehicle size (unfit for compact urban environments), the right-hand drive setup, limited dealer networks and higher maintenance costs for American brands when compared to the local ones.
While the U.S. concentrated on boosting imports to Japan at the negotiations, Japan sees the auto tariffs representing a potential loss of $17 billion in export opportunities to the US market.
In South Korea, negotiations were tardy as the country was going through a Presidential Election, with the new President Lee Jaw Myung assuming office on June 4.
However, Trump is not granting any extensions on trade talks, according to a post by the President on Truth Social.
After Mexico, South Korea and Japan are the largest sources of vehicles imported into the U.S.
In 2024, the U.S. imported 1.4 million passenger cars and light trucks from South Korea, and 1.3 million light vehicles from Japan, according to S&P Global Mobility.
China and the U.S. have reached a temporary agreement — the U.S. reduced tariffs on Chinese imports to 35%, while American goods imported to China were given a 10% duty.
In April, rates had been as high as 145%, during the commercial trade war between the two countries, during which Trump even considered delisting Chinese companies from the Nasdaq.
Tariffs will revert to these high numbers if no deal is reached by August 1.
On the other hand, negotiations between China and the European Union on electric vehicles have been nearly completed, China’s CCTV reported last week.
Talks between the two blocs were resumed earlier this year as both sides seek to avert a broader trade conflict, following Brussels’ move to impose provisional tariffs on Chinese-made fully electric vehicles late last year.
