President Trump has said that cars and parts for cars that come into the US will now be taxed at a rate of 25%.
Trump said that the new taxes would start on April 2, and businesses that bring in cars would have to pay extra starting the next day. Parts are going to be taxed in May or later.
The president promised that the move would bring “tremendous growth” to the industry and help create jobs and attract investment to the US.
But experts say the move will probably temporarily stop a lot of car production in the US, make prices go up, and make things harder with allies.
Trump’s new move could mess up the trade and supply chains for cars around the world.
About eight million cars were brought into the US from other countries last year. This was worth about $240 billion (£186 billion) in trade and about half of all sales.
The US gets most of its cars from Mexico. South Korea, Japan, Canada, and Germany come in second through fifth.
Many US automakers also do business in Mexico and Canada because of a free trade deal that has been in place for a long time.
The White House said the order would cover both finished cars and parts for cars, which are often brought in from other countries before they are put together.
The White House said that the new tariffs on parts from Canada and Mexico will not apply until US customs and the border guard set up a way to figure out the duties. Every day, billions of dollars worth of things cross between the countries that are neighbours.
General Motors stock fell about 3% on Wednesday. Ford was among the companies that sold off after the president announced the tariffs.
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