US President Donald Trump has announced steep tariffs on auto imports in a move set to fuel tensions with trading partners ahead of further promised levies next week.

"What we're going to be doing is a 25 percent tariff on all cars that are not made in the United States. If they're made in the United States, it is absolutely no tariff," he said at the White House on Wednesday.

The move is set to take effect April 2 and impact foreign-made cars and light trucks, in addition to existing tariffs on those goods.

To underscore his seriousness, Trump said, "This is permanent."

Since returning to the presidency in January, Trump has already imposed tariffs on imports from major US trading partners Canada, Mexico and China — as well as a 25 percent duty on steel and aluminium imports.

But he previously offered automakers a temporary reprieve from the levies affecting North America.

Later, a White House spokesperson said Auto parts that comply with the US-Mexico-Canada free trade agreement (USMCA) will be exempt for now from tariffs on auto imports announced by Trump.

Stocks falling, ties straining

Uncertainty over Trump's trade plans and worries they could trigger a downturn have roiled financial markets, with consumer confidence also falling in recent months amid fears of the tariffs' effects.

Wall Street slumped ahead of Trump's announcement, with the tech-focused Nasdaq plunging 2.0 percent.

Shares in General Motors fell roughly 3 percent in Wednesday trading. Ford's stock was up slightly. Shares in Stellantis, the owner of Jeep and Chrysler, dropped nearly 3.6 percent.

The Trump administration has referred to levies as a way to raise government revenue, revitalise American industry and press countries on US priorities.

But targeting imported cars could strain ties with countries like Japan, South Korea, Canada, Mexico and Germany — which are close US partners.

About 50 percent of cars sold in the United States are manufactured within the country. Among imports, about half come from Mexico and Canada, with Japan, South Korea and Germany, also major suppliers.

The Center for Automotive Research has previously estimated that US tariffs — including those on metals and imported autos — could increase the price of a car by thousands of dollars and weigh on the jobs market.

'Liberation Day'

Besides the automobile industry, Trump has also been eyeing sector-specific tariffs on industries like pharmaceuticals and semiconductors.

On Wednesday, he reaffirmed his intent to impose tariffs on lumber and pharmaceuticals.

Wednesday's announcement on autos comes ahead of April 2, which Trump has dubbed "Liberation Day" for the world's biggest economy.

He has promised reciprocal levies on the date, tailored to different trading partners in an attempt to remedy practices that Washington deemed unfair.

Trump said that the reciprocal tariffs he is expected to unveil on April 2 will be "very lenient" and impact all countries.

"We're going to make it all countries, and we're going to make it very lenient. I think people are going to be very surprised," he said.

US trade partners have been furthering talks with Washington as Trump's reciprocal tariff deadline looms.

EU trade chief Maros Sefcovic met his American counterparts Commerce Secretary Howard Lutnick and trade envoy Jamieson Greer this week.

Sefcovic said on social media that "the EU's priority is a fair, balanced deal instead of unjustified tariffs.