President Donald Trump signs an executive order imposing 25 percent tariffs on all cars that are shipped into the United States during an address from the Oval Office at the White House in Washington, D.C., March 26. UPI-Yonhap

U.S. President Donald Trump said Wednesday his administration will start imposing 25 percent tariffs on all imported cars early next month, a new levy likely to affect Korea's automotive industry.

Trump signed a proclamation to impose the new tariffs on foreign-made cars, light trucks and key parts, such as engines, transmissions, power train parts and electrical components. They will go into effect April 2, with the government set to start collecting them the following day.

He invoked Section 232 of the Trade Expansion Act of 1962 — a statute that provides the president with authority to adjust imports into the United States when he determines they threaten to impair national security — as he is using tariffs to bolster domestic manufacturing and reduce America's trade deficit.

"What we are going to be doing is a 25 percent tariff on all cars that are not made in the United States," Trump said, calling the tariff a "modest" measure and repeating the claim that countries doing business in the U.S. have "taken so much out of our country, friend and foe."

"If they are made in the U.S., (there is) absolutely no tariff," he added.

The auto tariffs are in addition to duties already in place, an aide to Trump said, noting the new levies will result in over US$100 billion of new annual revenue to the U.S.

Importers of automobiles under the U.S.-Mexico-Canada Agreement (USMCA), a free trade pact, will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25 percent tariff will only apply to the value of their non-U.S. content, the White House said.

"USMCA-compliant automobile parts will remain tariff-free until the secretary of commerce, in consultation with U.S. Customs and Border Protection, establishes a process to apply tariffs to their non-U.S. content," the presidential office said in a fact sheet.

The decision to tariff key auto parts came as the Trump administration eyes a revival of Detroit, Michigan, as a "motor city," which not only assembles cars but also churns out auto parts.

"We want to make Detroit the motor city again. Right now, it's the assembly city, and that's not good enough," a senior U.S. official told reporters in an online briefing.

He added: "Guess where the motors come from? They come from Germany and Japan and Korea ... over 50 percent."

The Trump administration is also trying to allow people buying a U.S.-made car with a loan to deduct interest payments for income tax purposes, the president said.

The imposition of auto tariffs on April 2 is set to coincide with Trump's announcement on reciprocal tariffs meant to match what other countries levy on U.S. exports. The reciprocal duties are to be customized based on trading partners' tariff- and non-tariff barriers, as well as other factors, including exchange rates.

The president said reciprocal tariffs will be imposed on "all countries" rather than focusing on specific countries.

"We are going to make it all countries, and we're going to make it very lenient," he said. "I think people are going to be very surprised. It'll be, in many cases, less than the tariff that they've been charging us for decades."

Korean businesses have been closely watching Trump's tariff announcements as they are trying to minimize the potential impact of planned U.S. levies.

The United States is a top auto export market for Korea. Of Korea's total car exports last year, exports to the U.S. were tallied at $34.7 billion, or 49.1 percent. Hyundai Motor Group and GM Korea exported around 970,000 and 410,000 units to the U.S., respectively, last year.

Jose Munoz, president and CEO, Hyundai Motor Company, speaks during a media tour and grand opening at the Hyundai Motor Group Metaplant America, March 26, in Ellabell, Ga. AP-Yonhap

No U.S. tariffs have been imposed on Korean cars since 2016 under a bilateral free trade agreement.

Amid growing tariff pressure, Hyundai Motor Group on Monday announced its plan to invest $21 billion in the United States through 2028. The plan consists of an investment of $8.6 billion for the automotive sector, $6.1 billion for the steel industry, component parts and logistics, and $6.3 billion for future industry sectors and energy.

The Trump administration is seeking to impose new tariffs as it has received comments from various U.S. industry groups.

Business groups in the U.S. have taken issue with various Korea-related trade issues, including Korea's age-based beef import restrictions, its online platform regulatory moves and the "screen quota system" mandating local theaters fill part of their screening time with Korean produced flicks. (Yonhap)