President of the United States Donald Trump on Tuesday, April 29, signed an executive order and a proclamation on easing auto tariffs.
The mentioned decision of the US president was the latest abrupt shift in Washington’s tariff policy, which in its current configuration demonstrates such a characteristic as rapid changes. Due to this circumstance, it is very difficult for businesses to keep up.
It’s worth noting that the executive order signed by Donald Trump does not provide for fundamental changes. In this case, the important thing is that the initial 25% tariff on cars imported into the United States from other countries will remain in place. Also, the 25% levy on auto parts will take effect at the end of the current week, as expected. However, there are still some changes.
The new measures provided for by an executive order signed by Donald Trump stipulate that United States-based automakers can receive reimbursement on car parts imports, which will be subject to 25% tariffs starting on May 3. In this case, the maximum reimbursement will be 3.75% of the value of the domestically produced autos. For the second year, the mentioned indicator will decrease to 2.5%. Then the reimbursement will be completely phased out. This means that the new measure is temporary. Also, the amount of reimbursement can hardly be described as significant financial support for the United States automotive industry. At the same time, any support is better than its absence.
The changes provided for by the executive order signed by Donald Trump will also shield United States-based automakers from multiple auto-related levies. Instead, players in the mentioned industry will be subject to the highest tariff associated with what they import. The corresponding approach means that companies could end up paying a 25% levy on the car part and not an additional 25% tariff on the steel and aluminum used during the vehicle manufacturing process.
It is also known that cars containing a combined 85% of parts that comply with the United States-Mexico-Canada Agreement and produced domestically effectively won’t face any levies.
The media, citing several White House officials, published information according to which Donald Trump decided to ease auto tariffs after he received a call from the chief executive officers of some auto manufacturing companies. Also, one of the interlocutors of the journalists noted that the president of the United States wants to maintain flexibility. White House officials used the right of anonymity since in this case it implies confidential information that is not subject to public discussion.
Senior Commerce Department officials, who previewed the new actions, said during a conversation with media representatives that the heads of automotive companies who called Donald Trump complained that steep tariffs would harm manufacturing and hiring in the United States.
The automotive industry, which includes both vehicle producers and dealers, is actively lobbying for relief from levies. In the context of this position, special attention is drawn to the fact that import taxes will affect the financial condition of Americans and will snarl the supply chain.
Last week, a coalition of United States-based and international automakers wrote a letter to Donald Trump. This letter asked for exemptions similar to those already granted to the semiconductor and consumer electronics sectors. In the relevant context, it was also separately noted that tariffs on auto parts would scramble the global supply chain of cars and provoke a domino effect, resulting in higher vehicle prices for buyers. There was also noted a risk that levies would cause a decline in sales at dealerships. Moreover, the letter highlighted that tariffs would make car services and repairs more expensive and less predictable.
General Motors’ chief executive officer Mary Barra said last Monday, April 28, that this manufacturer is grateful to Donald Trump for his support of the United States automotive industry and millions of Americans.
At the same time, General Motors noted that it no longer adheres to its guidance for improved profits in the current year. GM chief financial officer Paul Jacobson told reporters on Monday that, given the evolving nature of the situation, the manufacturer believes the future impact of tariffs could be significant. He noted that following the specified considerations, General Motors is reassessing its guidance and looks forward to sharing more when greater clarity is formed. GM plans to release its earnings for the first quarter of 2025 on Thursday, May 1.
On Tuesday, the value of General Motors shares showed a decline of 0.6%. At the same time, equities of other automakers such as Toyota, Ford, Stellantis, and Honda were on a growth trajectory.
Ford and Stellantis thanked Donald Trump for easing auto tariffs. In a media comment, Ford said that the company welcomes and appreciates the mentioned decisions of the President of the United States, which may mitigate the impact of levies on automakers, suppliers, and consumers. Stellantis’s chairman John Elkann, while talking to reporters, stated that this manufacturer appreciates the tariff relief measures decided by Donald Trump.
Ford will publish information about its earnings for the first quarter of 2025 on Monday, May 5. Stellantis will release its financial results for the mentioned period on Wednesday, April 30th.
As we have reported earlier, Donald Trump Floats Substantial China Tariffs Cuts.
