US President Donald Trump has announced the imposition of 25 percent tariffs on all cars and light trucks not manufactured in the US, AFP reported.

"What we're going to do is a 25 percent tariff on all cars not made in the United States. If they are made in the United States, there will be absolutely no tariff," Trump said at the White House. The move will go into effect on April 2.

Since returning to the presidency in January, the Republican president has already imposed tariffs on imports from major USA trading partners Canada, Mexico and China - as well as a 25 percent duty on steel and aluminum imports.

But before that, he offered automakers a temporary reprieve from the levies affecting North America.

Uncertainty over Trump's trade plans and fears that they could trigger a downturn have rattled financial markets, with consumer confidence also falling in recent months on concerns about the effect of tariffs.

Wall Street slumped ahead of Trump's announcement, with the tech-heavy Nasdaq down 2%.

Shares of automaker General Motors closed down 3.1%, while Ford rose 0.1%.

The Trump administration has pointed to the levies as a way to boost government revenues, revive U.S. industry and pressure states on U.S. priorities. 

Targeting imported cars could strain ties with countries such as Japan, South Korea, Canada, Mexico and Germany, which are close partners of the US. 

Around 50% of cars sold in the US are produced in the country. About half of imports come from Mexico and Canada, and Japan, South Korea and Germany are also major suppliers. 

The Center for Automotive Research has already estimated that US tariffs, including those on metals and imported cars, could increase the price of a car by thousands of dollars and affect the labour market. | BGNES