President Donald Trump plans to ease tariffs on automakers by rolling back some import duties, which will provide relief to the auto industry. Commerce Secretary Howard Lutnick confirmed that a deal has been reached with automakers, which he called a “major victory for the President’s trade policy.”
The specifics of the agreement have not been disclosed, but the administration will avoid adding to the existing 25% tariffs on imported vehicles and materials, such as steel and aluminum. The deal aims to reward companies that manufacture domestically while providing a runway for those committed to investing in America and expanding domestic manufacturing.
President Trump is expected to make a formal announcement on Tuesday when he visits Michigan, a key state for the American automobile industry, to mark the first 100 days of his second term. The auto industry has been concerned about the impact of tariffs, which could raise vehicle costs and decrease supply. General Motors’ CEO, Mary Barra, expressed gratitude to President Trump for his actions in supporting the US automotive industry.
However, the company has retracted its guidance for improved profits in 2025 and delayed discussing its first-quarter earnings to assess the impact of the tariff decision. According to S&P Global Mobility, General Motors builds over a third of its North American cars in Mexico and Canada.
Easing tariffs on imported vehicles
The company has ramped up production of its trucks at its Indiana factory but continues to maintain significant production in Mexico and Canada. Shares in Asian carmakers surged following the announcement, with Toyota, Honda, and Nissan experiencing gains. South Korean companies Hyundai and Kia also saw their stocks increase.
The auto industry has been lobbying for relief from the levies, arguing that tariffs on auto parts will disrupt the global supply chain and lead to higher prices for consumers and lower sales at dealerships. A coalition of US and international automakers has requested exemptions similar to those granted to semiconductors and consumer electronics. Any changes to auto tariffs could be retroactive, allowing automakers to receive refunds for tariffs they have already paid.
However, Trump has been known to reverse tariff policies, creating uncertainty regarding future changes. Earlier in April, Trump indicated a willingness to exempt some automakers from tariffs to give them more time to expand US manufacturing facilities. More details are expected to become available as the story develops.
Image Credits: Photo by Yuvraj Singh on Unsplash
