Tariffs of 25% on all foreign-made new cars imported into the US, including from the UK, went live overnight on 2 April after an announcement by US president Donald Trump.
An identical levy on car parts will begin in the coming months.
The news has come as a blow to UK car makers after “intense negotiations” between government officials from both nations failed to overturn or even lower the levy before the deadline.
Trade body the Society of Motor Manufacturers and Traders (SMMT) called the decision "another challenge" for a sector facing headwinds, adding that the cost "cannot be absorbed by manufacturers" so US buyers will be left to pick up the bill.
In addition, president Trump announced a 10% levy for all UK-made goods (the "minimum baseline"), which the SMMT called a "disappointing and potentially damaging measure" because it will impact other automotive products, it says.
Confirming the tariffs during a presentation at the Oval Office on 1 April, on what he has dubbed "Liberation Day", Trump said the decision was made because of the imbalance of US-made car sales in other markets, which has "decimated" US industries. "Ford sells very little" outside of the US, he claimed.
He noted that the new levy will allow for a better market for US-made cars and pointed to South Korea, where 80% of domestic-made cars are sold, and to Japan, where more than 90% of Japanese-made cars are sold.
Trump previously claimed that while the tariffs are bad news for companies that export foreign-built vehicles to the US, the move would lead to "tremendous growth" for the US automotive industry, adding that it would create more investment for US-based car makers and therefore more jobs.
Around eight million cars were imported into the US last year, approximately half the total sold in the market. Mexico will be the country hit hardest by the new levy. Car makers with production facilities in Mexico include BMW, Ford, Nissan, Volkswagen and Toyota. The US's other top importers are Canada, Germany, Japan and South Korea.
Trump confirmed that the new laws were "permanent", quashing any notion that they would be reversed. But he stated that "if you build your car in the United States, there is no tariff".
The likes of BMW, Mercedes-Benz and Volkswagen already have plants in the US, building key models for both the US and other global markets. BMW's Spartanburg plant in South Carolina, for example, builds the X3, X4, X5, X6, X7 and XM. It will be affected, though, because it builds and imports the 3 Series from Mexico for the US market.
