Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business, and the world
Donald Trump is visiting the US industrial heartland on Tuesday to tout another step back from his trade war, as he offers more tariff relief for some of the world’s biggest carmakers.
The president is sparing the manufacturers from some of his steepest duties and offering those that make their vehicles in the US small rebates to offset the cost of the levies. Carmakers importing parts will also be spared the administration’s tariffs on steel and aluminum.
“We just wanted to help them enjoy this little transition, short-term,” Trump told reporters outside the White House ahead of his trip. “If they can’t get parts, we didn’t want to penalize them.”
Trump’s moves were formalized in an executive order on Tuesday that the president signed ahead of his trip to Michigan, a hub of US auto manufacturing, where he will celebrate his 100th day in office.
The relief comes just four days before the administration was due to impose a 25 per cent tariff on imported car parts. A separate 25 per cent tariff on all imports of foreign-made cars was imposed earlier this month and included some exemptions for Mexico and Canada.
A senior commerce department official said the alterations to Trump’s tariffs on cars were “designed to allow all of the domestic auto manufacturers to grow their plan, to grow their employment and to build more factories in America”.
The Financial Times first reported Trump’s new car tariff relief plan last week. The president’s trade war has caused alarm across the car industry about the extra costs it faces to increase production in the US.
Although Trump’s executive order simplifies his tariff regime for car parts, manufacturers will still be subject to a 20 per cent tariff that he has applied to all imports from China.
Parts from Mexico and Canada that are compliant with the rules of the 2020 USMCA trade agreement will remain tariff-free. Non-compliant vehicles will face a maximum tariff of 25 per cent.
The tariff rebate in the executive order allows carmakers that assemble their vehicles in the US to reclaim up to 3.75 per cent of its value for the next year, according to a senior commerce department official. It will drop to 2.5 per cent from May 1, 2026, and be phased out completely on April 30, 2027.
The softening of the tariffs follows lobbying by industry to mitigate their costs and policy uncertainty. Carmakers including General Motors, Volvo Cars, and Porsche have pulled or drastically lowered their profit guidance.
The heads of Ford, GM, and Stellantis all welcomed the relief measures, although some executives complained that the tariff structure remained too complex.