President Donald Trump announced a plan to ease the burden of the new 25% tariffs on foreign-made vehicles and parts. Under the proposal, automakers with US factories can claim credits on import taxes based on sales volume and suggested retail prices.
White House officials said the proposal will use a formula tied to the number of cars sold in the United States and the price of each model.
Officials added that the relief will run for two years, giving businesses time to redesign their supply chains without facing the full cost of the tariffs. They also confirmed that parts made in Canada and Mexico under North American free trade rules will remain exempt from the 25% levy.
The announcement comes as President Trump prepares to hold a rally in Michigan on Tuesday to mark his first 100 days in office. Michigan is a key battleground state and the heart of the US auto industry. Michigan is also home to Ford, General Motors, and Stellantis, and a network of more than 1,000 major suppliers to the sector.
These companies have been in limbo since March, when Trump unveiled 25% tariffs on cars and car parts, saying he wanted to boost domestic manufacturing for national security.
Consumers raced to buy vehicles ahead of the tariffs, causing a short-lived sales spike. However, the move also forced manufacturers to rethink production schedules and supply arrangements under pressure.
When General Motors reported its quarterly results to investors on Tuesday, it said the duties would force it to revise its full-year forecast and withdraw its previous guidance. In an unusual step, General Motors also postponed its earnings call, which was set to discuss the figures.
The 25% tariff on foreign-made cars, which accounted for nearly half of US vehicle sales last year, went into effect last month. Tariffs on parts were scheduled to begin on 3 May.
US motor groups have welcomed the ease of tariffs
Last week, a coalition of US motor groups representing companies such as General Motors, Toyota, and Volkswagen sent a letter asking the president not to impose the duties on parts.
They warned that the levies would “lead to higher auto prices for consumers, lower sales at dealerships, and make servicing and repairing vehicles both more expensive.”
Under the adjusted plan, automakers can claim an “offset” on what they pay in parts tariffs worth up to 3.75% of a vehicle’s suggested retail price in the first year, falling to 2.5% in the second year.
According to the White House, any car with at least 85% of its parts made in the US, Canada, or Mexico will avoid the 25% duty at first. That threshold will rise to 90% in year two. Officials described the update as an acknowledgment that today’s auto supply chains span the globe, noting that even vehicles marketed as American-made often include parts from abroad.
They also said the auto tariffs would not stack on top of existing steel and aluminium duties, preventing firms from paying multiple charges on the same materials.
Automakers welcomed news of the softened stance. “We’re grateful to President Trump for his support of the US automotive industry and the millions of Americans who depend on us,” General Motors’ chief executive, Mary Barra, said in an emailed statement. “We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together.”
Ford said the move would “help mitigate the impact of tariffs on automakers, suppliers and consumers,” adding, “We will continue to work closely with the administration in support of the president’s vision for a healthy and growing auto industry in America.”
The company called policies that encouraged exports and ensured affordable supply chains “essential,” and said if major importers matched Ford’s commitment to US manufacturing, the country would see “a windfall of new assembly and supplier factories and hundreds of thousands of new jobs.”
Stellantis chairman John Elkann said, “We look forward to our continued collaboration with the US administration to strengthen a competitive American auto industry and stimulate exports.”
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Source: https://www.cryptopolitan.com/trump-will-ease-tariffs-for-us-automakers/