US President Donald Trump has announced a 25% tariff on all foreign-made cars and light trucks, triggering sharp criticism from key trading partners and prompting threats of retaliation.

The new tariffs, which take effect on April 3, also extend to key automobile parts within a month.

The move sent global automotive stocks tumbling, with major Japanese automakers Toyota, Nissan, and Honda all recording losses of more than 3% in early Thursday trading. South Korea’s Hyundai also saw a 2.7% decline.

Japan’s Prime Minister Shigeru Ishiba called the decision “extremely regrettable” and said Tokyo was considering “all kinds of countermeasures.”

Canada’s Prime Minister Mark Carney described the tariffs as a “direct attack” on Canadian workers and announced plans for a cabinet meeting to discuss a response.

Peter Navarro, Trump’s senior trade advisor, defended the move, accusing foreign manufacturers of turning the US into a “lower-wage assembly operation for foreign parts.” He singled out Japan and Germany for reserving higher-value production for their domestic markets.

The tariffs come amid escalating US trade tensions, following previous levies on steel, aluminum, and imports from Canada, Mexico, and China.

However, the White House clarified that vehicles and parts complying with the US-Mexico-Canada Agreement (USMCA) could qualify for lower or no tariffs, depending on their American content.