Tariff Relief Coming for Automakers Producing in the US, Says White House

Automakers welcome the president’s flexibility on auto tariffs.
Tariff Relief Coming for Automakers Producing in the US, Says White House
Workers put engines on the frame of Ford Motor Co. fuel-powered F-150 trucks under production at its truck plant in Dearborn, Mich., on Sept. 20, 2022. Jeff Kowalsky/AFP via Getty Images
Andrew Moran
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President Donald Trump will sign an executive order later today to cushion the impact of his automobile tariffs, the White House said.

Earlier this month, the president’s 25 percent tariffs on imported vehicles to the United States went into effect. The tariffs are intended to bolster domestic car manufacturing.

Senior Commerce Department officials confirmed that car companies will continue to pay a 25 percent tariff on imported vehicles, but they will not be subjected to other tariffs, such as the 25 percent levy on steel and aluminum or 10 universal baseline duties.

Trump’s executive action is meant to prevent certain tariffs from stacking on top of each other.

Tariffs on foreign car parts, scheduled to take effect on May 3, will also be adjusted. Automakers would receive tax credits of up to 15 percent of the value of automobiles assembled in the United States. This, officials say, could be applied against the value of imported parts.

The latest measure is the “finishing touch” on the auto industry’s revitalization. “This is designed to allow all of the domestic auto manufacturers to grow their plants, to grow new employment, and to build more factories in America,” a senior Commerce Department official said on a call with reporters.

The president has been committed to returning auto manufacturing to the United States, says Treasury Secretary Scott Bessent.

“We want to give the automakers a path to do that quickly, efficiently, and create as many jobs as possible,” Bessent said at the April 29 press briefing alongside press secretary Karoline Leavitt.

Trump is traveling to Michigan to celebrate the accomplishments of his first 100 days in office during a rally outside Detroit.

The auto industry welcomes the administration’s softening the potential economic impact of tariffs and offering some flexibility.

In a statement to The Epoch Times, Ford CEO Jim Farley said that the company “welcomes and appreciates” the president’s decisions to mitigate tariff-related effects on automakers, suppliers, and customers.

“As the right policies are put in place, it will be important for the major vehicle importers to match Ford’s commitment to building in America,” Farley said.

“If every company that sells vehicles in the U.S. matched Ford’s American manufacturing ratio, 4 million more vehicles would be assembled in America each year. The U.S. would see a windfall of new assembly and supplier factories and hundreds of thousands of new jobs.”

General Motors, meanwhile, pulled its annual forecast on April 29. In its first-quarter earnings report, the car manufacturer reported strong results, but paused its guidance for the rest of the year because of the uncertainty surrounding trade policy.

“The future impact of tariffs could be significant,” GM CFO Paul Jacobson said on a call with analysts and shareholders. “We’re telling folks not to rely on the prior guidance, and we'll update when we have more information around tariffs.”

Ford Motor shares climbed more than 1 percent, while General Motors slipped about 0.4 percent. Stellantis, the maker of Jeep, Chrysler, and Dodge, rose about 2 percent. Tesla Motors shares fell 0.5 percent.

A recent analysis by the Center for Automotive Research projected that tariffs targeting the auto sector could raise costs for U.S. automakers by $108 billion this year.
Jim Farley, president and CEO of Ford Motor Company, speaks to reporters about the UAW contract talks at the North American International Auto Show in Detroit on Sept. 13, 2023. (Paul Sancya/AP Photo)
Jim Farley, president and CEO of Ford Motor Company, speaks to reporters about the UAW contract talks at the North American International Auto Show in Detroit on Sept. 13, 2023. Paul Sancya/AP Photo

According to Stephanie Brinley, associate director of Auto Intelligence at S&P Global, automotive tariffs will lead to slower vehicle sales, production volumes, and higher costs, with the most extensive effects to occur in 2026.

“Based on the activity in the past three months and the trajectory of the latest actions across the globe, the impact of the tariffs has potential to have a massive near-term impact on global sales and production, with the US and North America feeling the worst of the impact,” Brinley said in a note.

Erin Keating, an executive analyst at Cox Automotive, expects the tariffs to raise new vehicle prices by as much as 15 percent.

“All signs point to higher prices this summer, as existing ‘pre-tariff’ inventory is sold down to be eventually replaced with ‘tariffed’ inventory. How high prices rise for consumers is still very much to be determined, as each automaker will handle the price puzzle differently,” Keating said in a note.

Data from the group’s Kelley Blue Book found that new vehicle prices were little changed in March at $47,462. Sales surged 30 percent last month, “as many consumers rushed to buy vehicles before the expected tariff-driven price hikes took hold.”

The Epoch Times reached out to General Motors and Stellantis for comment.

Andrew Moran
Andrew Moran
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Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."