President Donald Trump has enacted a 25 percent tariff on autos built outside of the U.S., to go into effect on April 3, through an executive order signed on March 26.

Along with this move, part of the president’s ongoing economic and trade reforms, a 25 percent tariff will also be placed on auto parts, like engines and transmissions, that originate from outside the U.S., to go into effect no later than May 3, according to the official statement published by the White House.

The executive order states that parts complying with the current tariff-free trade under the United States-Mexico-Canada Agreement will not be affected by the additional tariff until the Commerce Department develops a method to identify and appropriately administer the tariff to components made outside of the U.S.. Furthermore, the tariffs will apply solely to the value of non-U.S.-made components in vehicles imported from Canada and Mexico that comply with the agreement.

“What we’re going to be doing is a 25 percent tariff for all cars that are not made in the United States,” Trump said during a news conference at the White House. “We start off with a 2.5 percent base, which is what we’re at, and go to 25 percent.”

These tariffs are designed to boost manufacturing in the U.S. by giving automakers more of a reason to move production to domestic shores; however, a more immediate impact may be increased prices. For example, a vehicle entirely produced and assembled outside of the U.S. may see a 25 percent price increase. That said, vehicles assembled in Mexico or Canada may only see a price increase based on the components not included by the agreement, or excluding components originating from the U.S..

At this time, it’s unclear how other countries will, if at all, react to these new tariffs. The obvious short-term impact may be increased prices. Looking farther ahead, tariffs may spur stateside production, providing more jobs and opportunities for U.S. workers; however, it will take time for those factories to be ready.