Detroit, Mich. — President Donald Trump plans to implement measures aimed at alleviating the impact of recently imposed tariffs on the auto industry, which have raised concerns over increased prices and potential disruptions to sales and production. Under the new guidelines, U.S. automakers will be able to lower their import tax payments on foreign parts based on a formula linked to their sales volume and vehicle prices. This initiative is designed to provide temporary relief for car manufacturers as they adjust their supply chains, according to White House officials.
The anticipated changes come just before Trump’s rally in Michigan, marking his first 100 days in office. Michigan is a crucial state for the automotive sector, housing major players such as Ford, General Motors (GM), and Stellantis, as well as over 1,000 key suppliers. The uncertainty triggered by the announcement of a 25% tariff on cars and car parts in March has weighed heavily on the industry, which the administration views as fundamental to national security.
Since the tariff announcement, vehicle sales surged as consumers aimed to make purchases before the tariffs took effect. However, the announcement left automakers scrambling to modify their strategies. Recently, GM revised its annual forecast due to the disruption, canceling a planned investor call simultaneously, underscoring the uncertainties facing the sector.
The tariffs on foreign-made vehicles, which accounted for nearly half of U.S. auto sales in the previous year, came into effect last month, with duties on parts set to start on May 3. In response, a coalition of U.S. automotive industry groups recently appealed to Trump, warning that the tariffs could lead to increased consumer prices and reduced dealership sales.
The revised plan allows manufacturers to claim an offset for tariffs on parts, valued at up to 3.75% of the suggested retail price of their vehicles, decreasing to 2.5% in the subsequent year. The White House clarified that cars with 85% of their parts sourced from the U.S., Canada, or Mexico would evade tariffs, a threshold that will increase to 90% in the second year. This adjustment acknowledges the complex global supply chains that characterize the modern automotive industry.
The administration also aims to ensure that automakers are not subjected to multiple tariffs on the same components by exempting the car tariffs from additional duties on steel and aluminum. In anticipation of the changes, General Motors expressed gratitude for the efforts to ease the burden on the industry. CEO Mary Barra conveyed appreciation for the administration’s support, highlighting the positive dialogue between GM and the White House.
Ford echoed this sentiment, asserting that the measures will assist in minimizing the effects of tariffs on manufacturers, suppliers, and consumers alike. The company emphasized the importance of policies that promote exports and maintain affordable supply chains to stimulate domestic growth.
Stellantis Chairman John Elkann also welcomed the tariff relief, expressing optimism about ongoing collaboration with the U.S. government to bolster a competitive automotive sector and enhance export opportunities. As the industry navigates this shifting landscape, the focus remains on fostering domestic manufacturing and job creation in the American auto sector.