Donald Trump’s import taxes threatened to hurt domestic manufacturers and independent analyses indicated the hikes could make US production less competitive worldwide
Donald Trump has made a sharp U-turn on 25% tariffs on automobiles and auto parts.
The President signed executive orders on Tuesday to relax some of the tariffs, which automakers and independent analyses indicated could raise prices, reduce sales and make US production less competitive worldwide. It was feared last month more than 25,000 jobs in Britain alone were at threat following Mr Trump’s sanction.
But the world leader saw the tariffs as an opportunity to create more jobs in the United States. He thought automakers would move more production into the country, a belief since challenged by the industry.
Speaking today as he relaxed many of tariffs, Mr Trump, 78, said: “We just wanted to help them during this little transition, short term. We didn’t want to penalise them.”
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Mr Trump signed one order on Tuesday which amended his previous 25% auto tariffs, making it easier for vehicles which are assembled in the US with foreign parts to not face prohibitively high import taxes. Treasury Secretary Scott Bessent said: “President Trump has had meetings with both domestic and foreign auto producers, and he’s committed to bringing back auto production to the US. So we want to give the automakers a path to do that, quickly, efficiently and create as many jobs as possible.”
The amended order provides a rebate for one year of 3.75% relative to the sales prices of a domestically assembled vehicles. That figure was reached by putting the 25% import tax on parts that make up 15% of a vehicle’s sales price. For the second year, the rebate would equal 2.5% of a vehicle’s sales price, as it would apply to a smaller share of the vehicle’s parts.
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A senior Commerce Department official, insisted on anonymity to preview the order on a call with reporters, said automakers told Mr Trump the additional time would enable them to ramp up the construction of new factories, after automakers warned it would take time for them to shift their supply chains. The official said automakers would over the next month announce additional shifts for workers, new hires and plans for new facilities.
Stellantis Chairman John Elkann said in a statement that the company appreciates the president’s tariff relief measures. He said: “While we further assess the impact of the tariff policies on our North American operations, we look forward to our continued collaboration with the US Administration to strengthen a competitive American auto industry and stimulate exports.”
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.
