Donald Trump plans to ease the impact of tariffs on the American automotive industry by reducing some of the tariffs on imported car parts, according to officials in his administration.
Commerce Secretary Howard Lutnick stated in a White House press release: “President Trump is working to build an important partnership with domestic car manufacturers and our American workers. This deal is a major victory for his trade policy, as it rewards companies that manufacture locally while offering opportunities for manufacturers who have shown commitment to investing in America and expanding their domestic operations.”
According to a report by The Wall Street Journal, which was the first to break the news, this easing would mean that automakers paying tariffs on imported car parts would not be required to pay additional tariffs, such as those imposed on steel and aluminum. Under these plans, automakers would be able to recover a portion of the tariffs imposed on imported parts, based on the value of their production within the United States.
While cars manufactured outside the United States will still be subject to the tariffs imposed by Trump, they will be exempt from other tariffs that could affect manufacturing costs. This plan is expected to be officially confirmed later today, Tuesday.
In another move, Trump is traveling to Michigan on Tuesday to mark 100 days since taking office, a period he has used to make significant changes to the global economic system.
This move to ease the impact of tariffs on the automotive industry is part of his administration’s efforts to show some flexibility in tariff policies, which have caused concern in financial markets and led to uncertainty in the business environment, as well as fears of a sharp economic slowdown.
Automakers had anticipated on Monday that a tariff exemption on cars would be issued before Trump’s trip to Michigan, where the headquarters of the “Detroit Three” automakers and more than 1,000 major auto suppliers are located. In this context, General Motors CEO Mary Barra and Ford CEO Jim Farley praised the proposed changes. Barra said, “We believe President Trump’s leadership is helping achieve a level playing field for companies like General Motors, enabling us to invest more in the U.S. economy.”
Farley added that these changes “will help reduce the impact of tariffs on automakers, suppliers, and consumers.”
Last week, a group of U.S. auto industry organizations urged Trump not to impose a 25% tariff on imported car parts, warning that this would lead to reduced car sales and higher prices. Trump had previously indicated his intention to impose a 25% tariff on car parts starting May 3.
In a letter addressed to U.S. Trade Representative Jamie Greer, Treasury Secretary Scott Pruitt, and Howard Lutnick, industry groups representing companies like General Motors, Toyota, Volkswagen, and Hyundai expressed their concerns, stating: “Tariffs on car parts will disrupt the global automotive supply chain, leading to a ripple effect that will increase prices for consumers, reduce sales at dealerships, and make car maintenance and repairs more expensive and less predictable.”
