After negotiations, companies paying Trump’s car tariffs won’t also be charged for other levies
WASHINGTON – President Trump is expected to soften the impact of his automotive tariffs, preventing duties on foreign-made cars from stacking on top of other tariffs he has imposed and easing some levies on foreign parts used to manufacture cars in the U.S., according to people familiar with the matter.
The decision will mean that automakers paying Trump’s automotive tariffs won’t also be charged for other duties, such as those on steel and aluminum, according to people familiar with the policy. The move would be retroactive, the people said, meaning that automakers could be reimbursed for such tariffs already paid. The 25 percent tariff on finished foreign-made cars went into effect early this month.
The administration will also modify its tariffs on foreign auto parts—slated to be 25 percent and effective May 3—allowing automakers to be reimbursed for those tariffs up to an amount equal to 3.75 percent of the value of a U.S.-made car for one year. The reimbursement would fall to 2.5 percent of the car’s value in a second year, and then be phased out altogether.
Trump is expected to take the actions ahead of a trip to Michigan for a rally outside Detroit on Tuesday evening, marking 100 days since he took office.
Asked about the coming relief for automakers, Treasury Secretary Scott Bessent said at a White House briefing on Tuesday that the decision shows the president’s commitment to bringing manufacturing back to the U.S. “We want to give the automakers a path to do that quickly, efficiently and create as many jobs as possible,” he said. White House press secretary Karoline Leavitt said Trump will sign an executive order on auto tariffs later Tuesday.
Automakers, who have been in near daily communications with the administration, secured some relief while Trump obtained commitments to further his domestic manufacturing goals, the people said.
“President Trump is building an important partnership with both the domestic automakers and our great American workers,” Commerce Secretary Howard Lutnick said. “This deal will be a major victory for the president’s trade policy by rewarding companies who are already manufacturing domestically, while providing a runway to manufacturers who have expressed their commitment in investing in America and expanding domestic manufacturing.”
The steps are meant to provide automakers time to move supply chains for parts back to the U.S., and would likely be a significant boost to automakers in the short term, said one person familiar with the plan. Automakers would have to apply to the government for reimbursements, and it wasn’t immediately clear where those funds would come from.
“Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers and consumers,” Ford Chief Executive Jim Farley said in a statement. “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. Ford sees policies that encourage exports and ensure affordable supply chains to promote more domestic growth as essential.’’
Mary Barra, chair and chief executive officer of General Motors, said: “We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together.”
Analysts predicted higher prices for cars as a result of Trump’s auto tariffs. Morgan Stanley estimated the 25 percent tariff could increase the average cost of a car by $6,000, which would translate into a 10 to 12 percent price hike.
Ahead of announcing new tariffs earlier this month, Trump warned top automakers against raising prices. Automakers and industry suppliers have said bringing back their factories to the U.S.—the goal of Trump’s tariff plan—could take years.
Softening the impact of auto tariffs is the latest rollback of elements of the president’s trade policies, following market upheaval and intense lobbying by companies and countries.
Trump imposed a 90-day pause earlier this month on many of the tariffs he had put in place just days earlier. He also recently softened his tone on China after ratcheting up tariffs on imports from the country to 145 percent.