Donald Trump is set to deliver remarks on Tuesday regarding a significant policy change aimed at easing tariffs faced by U.S. automakers. Following weeks of conversations with domestic and international automakers, state officials are prepared to make the announcement. As the location for this event, Michigan is often considered the heart of the automotive industry.
The Wall Street Journal obtained and detailed the plan. Trump wants to provide tariff relief solely to automakers. A January 25% tariff on imported cars was implemented on April 3. This tariff is not limited to just passenger cars but covers all passenger vehicles, including SUVs, minivans, cargo vans, and light trucks. This tariff has been controversial from the beginning. By design, it’s going to raise prices on foreign-made cars, and the importers are going to respond by passing at least some of the tax burden onto their consumers.
This easing of tariffs creates an even greater opportunity for automakers. Now they’re free to reshore their parts supply chains closer to home, back to the United States. Treasury Secretary Scott Bessent said this change was crucial. Yet, he argued, it fits hand in glove with Trump’s bigger objective of bringing auto production back to these shores.
“President Trump has had meetings with both domestic and foreign auto producers, and he’s committed to bring back auto production to the US. We want to give the automakers a path to do that quickly, efficiently and create as many jobs as possible.” – Scott Bessent
Most major U.S. automakers are already on record, praising the new direction signaled by this policy change. General Motors were quick to thank Trump for his interventions on behalf of the American auto industry. In their letter, they highlighted the positive impact this funding could make for the millions of Americans employed in this sector.
“We’re grateful to President Trump for his support of the U.S. automotive industry and the millions of Americans who depend on us. We believe the President’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy.” – GM
Ford has publicly rejoiced at Trump’s rulings in favor of them. They’re confident these actions will lessen the harmful effects of the tariffs on automakers and consumers.
“Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers and consumers.” – Ford
Tariff relief will be phased out over time. In year two, reimbursements drop to 2.5% of the value of a car and then phase out completely. Perhaps most crucially, the current 25% tariff on finished foreign-made automobiles and parts is left intact.
Howard Lutnick, the influential CEO of investment firm Cantor Fitzgerald, alluded to the importance of this deal for the success of Trump’s trade policy.
“This deal is a major victory for the President’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.” – Howard Lutnick
