President Donald Trump’s administration reportedly plans to mitigate the effects of its automotive tariffs by easing certain levies on imported components used in cars produced domestically, while also ensuring that tariffs on fully assembled vehicles from overseas do not compound with additional duties.
This will mean that automakers subject to the automotive tariffs implemented by the Trump administration will be exempt from additional duties, like those on steel and aluminium, reported Wall Street Journal, citing sources acquainted with the policy.
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Furthermore, this policy adjustment will be applied retroactively, allowing automakers to receive reimbursements for these tariffs they have previously paid. The 25% tariff on finished overseas-manufactured cars was put into effect earlier in the month.
The administration plans to adjust its tariffs on imported auto parts, which are set to be imposed at a rate of 25% starting 3 May this year.
Under the new arrangement, automakers will have the opportunity to receive tariff reimbursements.
For the first year, they can be compensated for tariffs up to an amount that equals 3.75% of the value of a car manufactured in the US. In the second year, this reimbursement rate will decrease to 2.5% of the vehicle’s value, before being completely phased out thereafter.
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By GlobalDataAhead of his rally outside Detroit on Tuesday evening, which marks the 100-day milestone of his presidency, Trump is anticipated to undertake certain actions.
Automakers, who have been in frequent contact with the administration, managed to obtain some concessions, while Trump secured pledges to advance his domestic manufacturing objectives, the sources told the media outlet.
Commerce Secretary Howard Lutnick said: “President Trump is building an important partnership with both the domestic automakers and our great American workers.
“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 designed to give automakers a transitional period to relocate their parts supply chains to the US, which is expected to substantially benefit the industry in the near term, according to an individual with knowledge of the plan. Automakers would be required to submit applications to the government for reimbursement, though the source of these funds has not been immediately identified.
Commenting on this move, Ford chief executive Jim Farley was quoted by the publication as saying: “Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers and consumers.
“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.’’
General Motors chair and chief executive officer Mary Barra too said: “We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together.”
Last week, it was reported that the UK government is also considering tariff concessions on American-made vehicles to protect its exports from the US levies.
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