Trump announces easing of car tariffs during Michigan visit

During a visit to Michigan, a central hub for car manufacturing in the United States, President Donald Trump announced a softening of previously imposed tariffs on imported cars and car parts.

The executive order, signed by the president just before his trip, provides some relief from the steep duties initially threatened. Automakers that manufacture their vehicles within the US will now be eligible for small rebates. At the same time, the administration will no longer impose tariffs on steel and aluminum imported by car companies for use in their production processes.

"I'm giving them a little bit of a break," President Trump told a crowd in Michigan. He also expressed his desire for car companies to produce more parts domestically, stating, "I want them to make their parts here. But I gave them a little bit of time."

This change in policy arrived just four days before a previously announced 25 percent tariff on imported car parts was set to take effect. Earlier in the month, a separate 25 percent tariff on all foreign-made car imports was implemented, although some exceptions were made for vehicles originating from Mexico and Canada.

While this executive order simplifies the tariff system for car parts, a 20 percent tariff on all imports from China will still apply to manufacturers. Car parts made in Mexico and Canada that adhere to the rules outlined in the 2020 USMCA trade agreement will continue to be exempt from tariffs. Vehicles that do not meet these requirements could face a maximum tariff of 25 percent.

The newly introduced tariff rebate will allow US-based carmakers to reclaim up to 3.75 percent of a car's retail value for the coming year. This rebate will be reduced to 2.5 percent starting on May 1, 2026, and will be completely phased out by April 30, 2027.

The softening of the tariff policies follows lobbying efforts from the automotive industry. Several major car companies, including General Motors, Volvo Cars, and Porsche, had already lowered their profit forecasts, squarely blaming the tariffs.

General Motors CEO Mary Barra commented, "We believe the president's leadership is helping level the playing field for companies like GM and allowing us to invest more in the US economy." Ford also issued a statement saying that President Trump's decisions would "help mitigate the impact of tariffs on automakers, suppliers and consumers." Earlier on Tuesday, GM had cited tariff uncertainty as a reason for abandoning its previous profit outlook and temporarily halting share buybacks.

Via