Trump Gives Automakers Tariff Relief
President Donald Trump's administration announced on Tuesday that it would alleviate some duties on foreign parts used in domestically built vehicles. The adjustment is designed to prevent tariffs on imported cars from getting out of control.
Key Points
- Automakers will be reimbursed for overlapping tariffs on foreign parts and finished vehicles to prevent compounding costs.
- Companies can reclaim up to 3.75% of a car’s value in tariff reimbursements for one year, then 2.5% the next year, before the program phases out.
- Automakers warned that tariffs could otherwise raise car prices by up to 12%; the decision reflects a broader softening of Trump’s trade policies under economic and industry pressure.
President Trump will announce measures that prevent tariffs on fully assembled foreign-made cars from stacking with existing tariffs on steel and aluminum, says The Wall Street Journal. The play is expected to be retroactive and would also reimburse automakers for tariffs they’ve already paid.
The administration also plans to modify the upcoming 25% tariff on imported auto parts, scheduled to take effect on May 3.
Last week, a coalition of automakers, including General Motors, Toyota, Volkswagen, and Hyundai, urged the White House to reconsider imposing a 25% tariff on imported auto parts. In a letter sent to senior administration officials, the industry warned that such tariffs would disrupt global supply chains, raise vehicle prices, reduce dealership sales, and drive up costs for vehicle service and repair.
Automakers will be reimbursed for part tariffs up to 3.75% of the value of U.S.-made vehicles in the first year, with the rate falling to 2.5% in the second year before the program is phased out. Manufacturers will need to apply to the government for reimbursement. Automakers reportedly secured these carve-outs in exchange for commitments to increase U.S. manufacturing.
"President Trump is building an important partnership with both the domestic automakers and our great American workers," said Commerce Secretary Howard Lutnick. "This deal rewards companies already manufacturing domestically while giving others time to shift their supply chains back to America."
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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