Beginning this week, the Trump administration will impose a 25% tariff on all imported cars and car parts. The two countries most impacted by these tariffs are the two countries the U.S. shares the continent with — Canada and Mexico.

What is interesting is that Donald Trump’s move appears to undermine a key policy win from his first term in office, when his administration oversaw the reforming of the North American Free Trade Agreement (NAFTA) to the U.S.-Mexico-Canada Agreement (USMCA).

After the USMCA was agreed to in January 2020, Trump boasted that it was “the largest, most significant, modern, and balanced trade agreement in history,” adding, “All of our countries will benefit greatly.”

But now Trump is singing a different tune. The “most significant … balanced trade agreement in history” is now not so much. According to Trump, the deal needs to be reworked again, and his target is the American automotive industry.

However, Trump’s sudden move is actually something he planned and talked about for some time. In an interview with Fox News’s Maria Bartiromo last October, she asked about Trump’s plan to renegotiate the USMCA. He answered, “I want to make it a much better deal. I want to take advantage, now, of the car industry.” This is why he is now raising the 25% car tariff.

It appears that Trump’s favored weapon in his economic arsenal are tariffs. While he certainly used them during his first term, much to the chagrin of many economists on both sides of the political divide, he interpreted the effect of the tariffs as an overall success.

Thus, against this backdrop, Trump, now early in his second term, is leaning even harder on his favorite economic weapon. He aims to ignite a manufacturing boom within the U.S., where “Made in America” replaces the nearly ubiquitous “Made in China.” In short, just like he’s currently seeking to reform Washington, Trump hopes to rebalance the American economy from being so heavily consumeristic toward more production.

America is buying more than it is selling. Trump sees the U.S.‘s trade imbalances with many of its major trading partners worldwide as a detriment rather than a feature of America’s economic engine.

The problem is that tariffs always have the impact of raising the price of goods. And in this case, the goods in question are automobiles. What will the economic impact of these tariffs be?

Besides raising prices, that is difficult to ascertain. Based on current manufacturing data, roughly one-third of new cars sold in the U.S. would be hit by these tariffs. Furthermore, the tariff on imported car components would impact an additional 16% of vehicles.

Volvo, Mazda, Volkswagen, Hyundai-Kia, Mercedes, BMW, and Toyota will be most impacted currently. All of these automakers manufacture less than 50% of their vehicles in the U.S. Roughly 45% of cars sold in America are imported, mainly from Canada and Mexico. Furthermore, most 2025 model vehicles manufactured in the U.S. get at least 20% of their components from outside North America.

So, Trump’s auto import tariff on the American consumer has effectively imposed a new tax on nearly every new vehicle sold in the U.S.

He aims to help the auto industry, but will the cost to consumers doom his efforts?