WASHINGTON (TNND) — President Donald Trump's 25% tariffs on foreign-built cars have officially taken effect, a move aimed at revitalizing American auto production and creating more jobs domestically. The tariffs are expected to significantly impact the market, particularly if foreign companies do not relocate their operations to the United States.

In 2024, Americans purchased approximately 16 million cars, SUVs, and light trucks, with half of these vehicles being imports, according to the White House. The tariffs could compel companies to shift production to the U.S. to avoid the added costs.

Certain models, such as the Ford Maverick, Bronco Sport, and Mustang Mach-E, are currently manufactured in Mexico, while Buick's Encore GX and Envista are produced in South Korea, according to Cars.com. These vehicles could see price increases if production remains abroad.

Some manufacturers have already announced plans to invest in U.S. production. Hyundai, Honda, and Stellantis have committed billions of dollars to new manufacturing plants and production facilities in the country.

In addition to tariffs, Trump is introducing incentives to encourage Americans to purchase domestically made-vehicles. A proposed tax credit, similar to the electric vehicle tax credit, would offer rebates or tax breaks for buying American-made cars. The specifics are still being finalized, but the goal is to make U.S.-made cars more attractive to consumers and offset potential price hikes from the tariffs.

Senator Bernie Moreno has introduced the United States Automobile Consumer Assistance and Relief Act (USA CAR Act), which would allow Americans to write off interest on auto loans for U.S.-made cars. The bill does not specify a capped amount, meaning potential savings could vary based on loan size and interest rates. For example, financing a $30,000 car loan at a 5% interest rate could result in a $330 tax saving for someone in a 22% tax bracket.