U.S. President Donald Trump has made the decision to lower auto tariffs by signing two relevant executive orders. The first order delays the implementation of new tariffs on imported cars concerning aluminum and steel. The second order alters the 25% tariff on imported auto parts, which has not yet come into effect and is set to start on May 3.
This is reported by Finway
Demands from Manufacturers
This decision was made under pressure from automakers, parts suppliers, and dealers. They warned that “excessive tariffs could lead to rising car prices, factory shutdowns, and job losses.” In particular, Trump noted that these steps represent a partial and, in some cases, temporary retreat from the threat of imposing high tariffs on imported cars and parts.
“These steps represent a partial – and in the case of parts, temporary – retreat from the most destructive scenario, where imported cars and parts could face multiple levels of high tariffs.”
Changes in Tariff Regime
Analysts explained that Trump’s first order aims to avoid imposing “multiple tariffs” on automakers, specifically exempting imported cars from separate tariffs on aluminum and steel. They emphasized that “tariffs should not have a cumulative effect,” as this could complicate achieving political goals.
The second order provides for a change in the 25% tariff on imported auto parts, allowing automakers to receive compensation of up to 3.75% of the value of cars produced after April 3. However, this compensation will gradually decrease and will be eliminated by 2026.
Automakers have expressed concern about the new conditions, noting that it remains unclear how the new tariffs on parts will be applied and what impact these changes will have on their business. The president of the Alliance for Automotive Innovation emphasized that “this is the biggest problem: uncertainty.”
In this regard, automakers are awaiting clarifications from the Trump administration regarding tariff costs, with some already suspending production and laying off workers.