Donald Trump eases auto tariffs burden
U.S. President Donald Trump signed a pair of orders to soften the blow of his auto tariffs on Tuesday with a mix of credits and relief from other levies on materials, and his trade team touted its first deal with a foreign trading partner.
The developments helped eased some investor worries about the erratic trade policies of Trump as the president visited Michigan, a cradle of the U.S. auto industry, just days before a fresh set of 25% import taxes was set to kick in on automotive components.
The trip, on the eve of his 100th day in office, came as Americans take an increasingly dim view of Trump’s economic stewardship, with indications his tariffs will weigh on growth and could drive up inflation and unemployment.
In his latest partial reversal of tariff policies, the Republican president agreed to give carmakers two years to boost the percentage of domestic components in vehicles assembled domestically.
It will allow them to offset tariffs for imported auto parts used in U.S.-assembled vehicles equal to 3.75% of the total value of the Manufacturer’s Suggested Retail Price of vehicles they build in the U.S. through April 2026, and 2.5% of U.S. production through April 30, 2027.
Auto industry leaders had lobbied the administration furiously during the weeks since Donald Trump first unveiled his 25% tariffs on imported vehicles and auto parts. The levies, aimed at forcing automakers to reshore manufacturing domestically, had threatened to scramble a North American automotive production network integrated across the U.S., Canada and Mexico.
It offers the industry a “little relief” as companies invest in more U.S. production, Trump said as he left Washington for Michigan. “We just wanted to help them … if they can’t get parts, we didn’t want to penalize them.”
The White House said the change will not affect the 25% tariffs imposed last month on the 8 million vehicles the United States imports annually.
Read more: Donald Trump expected to ease tariffs impact on automakers
Autos Drive America, a group representing Toyota Motor, Volkswagen, Hyundai and nine other foreign automakers, said Donald Trump’s order provided some relief “but more must be done in order to turbocharge the U.S. auto industry.”
MORE TARIFF UNCERTAINTY
Candace Laing, president of the Canadian Chamber of Commerce, said the tariff fix fell short of what companies in the deeply integrated North American industry needed.
“Only an end to tariffs provides real relief. Ongoing ups and downs perpetuate uncertainty, and uncertainty drives away business for both Canada and the U.S,” she said in a statement.
The uncertainty unleashed across the auto sector by Donald Trump’s tariffs remained on full display Tuesday when GM pulled its annual forecast even as it reported strong quarterly sales and profit. In an unusual move, the carmaker also opted to delay a scheduled conference call with analysts until later in the week, after the details of tariff changes were known.
Meanwhile, U.S. Commerce Secretary Howard Lutnick told CNBC he had reached a deal with one foreign power that should permanently ease the “reciprocal” tariffs Trump plans to impose. Lutnick declined to identify the country, saying the deal was pending local approvals.
“I have a deal done … but I need to wait for their prime minister and their parliament to give its approval,” he said.
White House officials had no further comment on the country in question, but Trump struck an upbeat tone about a deal with India, telling reporters: “India is coming along great. I think we’ll have a deal with India.”
Lutnick’s comments helped further lift stock prices that had been battered by Trump’s moves to reshape global trade and force goods makers to shift production to the U.S. The benchmark S&P 500 Index (.SPX), closed 0.6% higher for a sixth day of gains, its longest streak of gains since November.
