The White House announced on Tuesday that it will ease tariffs on car manufacturers, bringing renewed optimism to Detroit, where the automotive sector has anxiously awaited clarity on President Donald Trump’s rapidly shifting trade policies.
The revised measures include a guarantee that manufacturers will not face multiple tariffs on a single vehicle. This is intended to encourage both domestic and foreign companies to build or expand production facilities within the United States.
Carmakers have been among the worst affected by Trump’s wide-ranging tariffs. The relief package comes as the president prepares to visit the Detroit area later on Tuesday to mark his 100th day in office.
“The president will sign the executive order on auto tariffs later today,” White House Press Secretary Karoline Leavitt confirmed to reporters.
Experts had warned that the existing tariffs risked pushing up car prices, damaging sales and threatening jobs. Yet Trump has consistently defended the duties, claiming they are vital to revitalise American industry.
A senior Commerce Department official said the government recognised that manufacturers needed breathing room to shift supply chains to the US.
“You’re going to see a massive resurgence of domestic auto manufacturing,” the official stated.
Grace Period Measures
Currently, a 25 percent tariff applies to imported vehicles, along with additional 25 percent duties on steel and aluminium. New levies on foreign-made car parts are expected to begin on May 3.
Under Trump’s new policy, importers will now pay only the higher of the two tariffs — on vehicles or on raw materials — rather than both, according to the Commerce Department.
Another change provides a two-year grace period for companies importing parts for vehicles assembled in the US. They will be allowed to deduct 15 percent of the vehicle’s list price in the first year and 10 percent in the second.
This adjustment is meant to allow businesses time to reconfigure supply chains and increase local sourcing.
Auto manufacturers have reportedly told the Trump administration that these measures will lead to “dramatic increases in production” on American soil.
Around half of all cars sold in the US are currently assembled domestically. An additional 25 percent come from Mexico and Canada, with the remainder sourced from countries such as Germany, Japan, and South Korea.
General Motors has already responded by announcing plans to expand truck production at its Indiana facility. CFO Paul Jacobson said the company is evaluating other cost-effective steps it can take swiftly.
Ford CEO Jim Farley welcomed the policy shift, stating it would help mitigate the impact of tariffs across the supply chain and bolster domestic production.
He estimated US factories could produce an additional four million vehicles annually under the right conditions, creating hundreds of thousands of new jobs.
Foreign manufacturers including Nissan, Honda and Volvo have also committed to increasing their US investments.