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Trump plans to ease tariff impact on US carmakers Trump plans to ease tariff impact on US carmakers
(about 8 hours later)
President will ease some duties on foreign parts in domestically manufactured cars, administration says US president will curb some duties on foreign parts in domestically manufactured cars, administration says
Donald Trump plans to cushion the impact of his tariffs on US carmakers by easing some duties on foreign vehicle parts, his administration has said. Donald Trump will unveil plans to water down his sweeping tariffs for US carmakers on Tuesday by curbing some duties on foreign parts, granting a reprieve to an industry that warned his strategy would hike costs for American manufacturers by tens of billions of dollars.
“President Trump is building an important partnership with both the domestic automakers and our great American workers,” the commerce secretary, Howard Lutnick, said in a statement provided by the White House. The White House trailed the deal on Monday and while details were scarce, Trump appears to be preparing to reprieve auto giants operating in the US from the his aggressive trade strategy. Officials said he would sign an executive order later on Tuesday.
“This deal is a major victory for the president’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.” Trump is “committed to bringing back auto production to the US”, US Treasury secretary Scott Bessent told reporters, “so we want to give automakers a path to do that quickly, efficiently and create as many jobs as possible.”
It comes after industry analysis found that the US big three carmakers – Ford, General Motors and Stellantis – could face an increase of more than $42bn in costs as a result of Trump’s 25% tariff on the auto industry, with duties of almost $5,000 for the parts they import to make the average car made in America.
“President Trump is building an important partnership with both the domestic automakers and our great American workers,” the commerce secretary, Howard Lutnick, claimed in a statement. “This deal is a major victory for the president’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.”
The move means car companies paying tariffs would not be charged other levies, such as those on steel and aluminium,, according to the Wall Street Journal, which first reported the development.The move means car companies paying tariffs would not be charged other levies, such as those on steel and aluminium,, according to the Wall Street Journal, which first reported the development.
Carmakers would be able to secure a partial reimbursement for tariffs on imported auto parts, based on the value of their US car production, under the plans. Carmakers would be able to secure a partial reimbursement for tariffs on imported auto parts, based on the value of their US car production, under the plans. Cars made outside the US will still be subject to Trump’s tariffs but will be exempt from other levies.
Cars made outside the US will still be subject to Trump’s tariffs but will be exempt from other levies. The plan is expected to be officially confirmed later on Tuesday. Trump is due to travel to Michigan on Tuesday for a rally marking his first 100 days in office. His return to the White House – and hopes to reshape the global economy with steep tariffs – swiftly ushered in a new period of economic volatility for firms in the US and overseas.
Trump is traveling to Michigan on Tuesday to commemorate his first 100 days in office, a period that the Republican president has used to upend the global economic order. After imposing 10% tariffs on imports from much of the world, the Trump administration plans to speak with 17 trading partners “over the next few weeks”, Bessent said, acknowledging that Trump – who has jolted long-standing US relationships with a string of markets – creates “strategic uncertainty” in negotiations.
The move to soften the effects of auto levies is the latest by his administration to show some flexibility on tariffs, which have sown turmoil in financial markets, created uncertainty for businesses and sparked fears of a sharp economic slowdown. “As we start moving forward announcing deals, then there will be certainty,” said Bessent. “But certainty is not necessarily a good thing in negotiating.”
Carmakers said on Monday that they were expecting Trump to issue relief from the auto tariffs ahead of his trip to Michigan, which is home to the “Detroit Three” companies and more than 1,000 big auto suppliers. After rapidly lifting tariffs on Chinese products to 145%, Trump’s officials maintain that the risks for China are high – while playing down the potential impact in the US, despite widespread concern over potential shortages and price increases.
The General Motors (GM) chief executive, Mary Barra, and Ford’s boss, Jim Farley, praised the planned changes. “We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the US economy,” Barra said. Sign up to This Week in Trumpland
Farley said the changes “will help mitigate the impact of tariffs on automakers, suppliers and consumers”. A deep dive into the policies, controversies and oddities surrounding the Trump administration
Last week, a coalition of US car industry groups urged Trump not to impose 25% tariffs on imported parts, warning they would cut vehicle sales and raise prices. Trump had said earlier he planned to impose tariffs of 25% on car parts no later than 3 May. after newsletter promotion
“Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable,” the industry groups said in the letter. Bessent, who claimed China could shed 10 million jobs “very quickly” if the tariffs are maintained that their current level, denied the US could face disruption.
The letter from the groups representing GM, Toyota Motor, Volkswagen, Hyundai and others, was sent to the US trade representative Jamieson Greer, the treasury secretary Scott Bessent and Lutnick. ​”I wouldn’t think that we would have supply chain shocks. I think retailers have managed their inventory in front of this,” he said. “I speak to dozens of companies, sometimes daily, but definitely weekly. They know that President Trump is committed to fair trade, and have planned accordingly.”
But with consumers in the firing line, reports that Amazon might start disclosing the cost of tariffs on its platform drew a sharp rebuke from the White House. “This is a hostile and political act by Amazon,” claimed press secretary Karoline Leavitt, following a call with Trump.
Reuters contributed reporting