White House scales back auto tariffs after industry panic: ‘It’s a little bit of help’
Trump signed a new set of executive orders, which will provide some relief for US automakers who feared the toll of stacking tariffs on prices
President Donald Trump walked back some of the tariffs he imposed on imported auto parts, providing some relief to U.S. automakers after warnings from car manufacturers about increased prices.
The president signed two executive orders on Tuesday, one of which waives levies such as those on steel and aluminum for carmakers who will already pay a 25 percent tariff on imported vehicles. That break from “stacked” tariffs will be retroactive for U.S. automakers.
Automakers and independent analyses indicated that the tariffs would raise prices, reduce sales and make U.S. production less competitive worldwide.
“I have now determined that, to the extent these tariffs apply to the same article, these tariffs should not all have a cumulative effect (or ‘stack’ on top of one another) because the rate of duty resulting from such stacking exceeds what is necessary to achieve the intended policy goals,” one of Trump’s new orders stated.
Treasury Secretary Scott Bessent said on Tuesday that the goal was to enable automakers to create more domestic manufacturing jobs.
“President Trump has had meetings with both domestic and foreign auto producers, and he’s committed to bringing back auto production to the U.S.,” Bessent said. “So we want to give the automakers a path to do that, quickly, efficiently and create as many jobs as possible.”
The other executive order modifies Trump’s impending tariffs on imported auto parts by reimbursing automakers up to an amount equal to 3.75 percent of a U.S.-made car for one year. That reimbursement would be reduced to 2.5 percent of a car’s value in the second year.
“It’s a little bit of help,” Trump told reporters. “We just wanted to help them enjoy this little transition, short-term.”
Consumers, however, would not only pay some increased costs for cars due to remaining tariffs, but would also presumably foot the new “reimbursement” to automakers.
General Motors CEO Mary Barra said the automaker is grateful for Trump's support of the industry, and she noted the company looks forward to conversations with the president and working with the administration.
“We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy," Barra said in a statement.
Stellantis Chairman John Elkann said in a statement that the company also appreciates the president's tariff relief measures.
“While we further assess the impact of the tariff policies on our North American operations, we look forward to our continued collaboration with the U.S. administration to strengthen a competitive American auto industry and stimulate exports," he said.
The tariffs imposed by Trump were seen by some as an existential threat to the auto sector. Arthur Laffer, to whom Trump gave the Presidential Medal of Freedom during his first term, said in a private analysis that the tariffs without any modifications could add $4,711 to the cost of a vehicle.
New vehicles sold at $47,462 on average last month, according to auto-buying resource Kelley Blue Book. Tariffs stress the automotive supply chain, a complex web that spans the globe. Not only do many auto parts cross North American borders several times before being assembled into a finished vehicle, but auto manufacturers also rely on suppliers around the world for thousands of components.
Increased levies would certainly cost new car buyers — sensitive to inflation — more, driving them to the used vehicle market and quickly straining the availability of pre-owned cars. Tariffs also impact the cost of owning and maintaining a vehicle.
The modifications come as Trump marks 100 days back in the White House by going to Michigan, a state defined by auto manufacturing. Trump won the state in last year's election by promising to increase factory jobs.
Still, it remains unclear what impact Trump's broader tariffs will have on the U.S. economy and auto sales. Most economists say the tariffs, which could ultimately hit most imports, would raise prices and slow economic growth, possibly hurting auto sales despite the relief that the administration intends to offer on its previous policies.
Additional reporting by the Associated Press.