The Trump administration announced that it would reveal plans as soon as Tuesday to lessen the effect of tariffs on imported cars and car parts, allowing automakers more time to shift production to the U.S.
The existing 25 percent tariffs on imported vehicles and auto parts will stay in effect. However, they will be adjusted so they won’t accumulate with other tariffs, such as those on steel and aluminum, according to a White House representative. This means automakers won’t incur additional tariffs on these metals, which are commonly used in car manufacturing, in addition to the tariffs on vehicles and parts.
Furthermore, automakers will be reimbursed for part of the tariff costs on imported components. This reimbursement will be up to 3.75 percent of a new car’s value during the first year and will decrease over two years, as confirmed by the spokesperson.
A 25 percent tariff on imported cars was implemented on April 3. This Saturday, the tariffs will also apply to imported parts.
“President Trump is forging an important partnership with both U.S. automakers and American workers,” said Commerce Secretary Howard Lutnick in a statement. “This agreement is a significant win for the president’s trade policy by rewarding companies that manufacture domestically, while providing support for those companies that are committed to investing in the U.S. and growing their domestic production.”
Nevertheless, even with these modifications, considerable tariffs will still exist on imported cars and auto parts, which may increase costs for new and used vehicles by thousands of dollars and drive up prices for repairs and insurance.
The changes to the tariffs were previously reported by The Wall Street Journal. Mr. Lutnick played a key role in helping automakers receive a significant exemption from tariffs in March and has been advocating for relief for certain industries affected by these tariffs.
Automakers responded positively to the announced changes. “We believe the president’s actions are helping create a fair competition for companies like G.M. and enabling us to invest even more in the U.S. economy,” stated Mary T. Barra, CEO of General Motors. “We are grateful for the constructive discussions with the president and his administration and look forward to continuing to collaborate.”
