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US President Donald Trump is set to ease the impact of automotive tariffs, a move designed to support US carmakers by removing overlapping import duties on parts used in domestically assembled vehicles and reimbursing levies already paid, according to the news agency Reuters.
The decision, which will be officially announced during Trump’s Tuesday visit to Michigan, comes amid growing concern from the auto industry over the economic fallout of sweeping tariffs.
According to CNN, the revised structure will ensure that cars built in the US using imported components are not hit by cumulative duties, such as those on steel and aluminium, in addition to the 25 per cent auto tariff.
“This deal is a major victory for the President’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing,” commerce secretary Howard Lutnick said in a statement.
According to The Wall Street Journal, which first reported the development, automakers will also be eligible for reimbursements for tariffs they have already paid. A White House official confirmed the report, noting that the relief plan would become official on Tuesday.
General Motors CEO Mary Barra was quoted by Reuters praising the move and saying, “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 US economy.” Ford’s CEO Jim Farley echoed that view, calling the plan “helpful in mitigating the impact of tariffs on automakers, suppliers and consumers.”
As per BBC, Trump is expected to announce the easing of tariffs during a rally in Michigan, a key automotive hub and home to major manufacturers like Ford, GM, and Stellantis, as well as over 1,000 auto suppliers.
Industry groups had earlier warned of serious consequences if the 25% tariffs on imported parts came into full effect. In a letter cited by CNN, carmakers including Toyota, Volkswagen, and Hyundai said, “Tariffs on auto parts will scramble the global automotive supply chain… raise auto prices for consumers, lower sales at dealerships and make servicing vehicles more expensive.”
Automakers will be reimbursed up to 3.75% of a car’s value in the first year, with the benefit being phased out over two years, reported The New York Times
The decision comes just days before the tariffs were set to take full effect on May 3.
Shares of Asian carmakers rose sharply following the news. Toyota was up 3.6 per cent, while Honda, Nissan, Hyundai, and Kia also registered gains in anticipation of reduced trade friction.
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