U.S. Auto Industry Gets Tariff Break
White House eliminates one tariff and reduces another’s impact while keeping 25% duty on imported cars.
Industry forecasters have said at least part of trade tariff cost would be passed on to consumers.
Pexels/Jakub Zerdzicki
After nearly two months of back-and-forth U.S. trade policy moves, the domestic auto industry got partial relief Tuesday, some of the tariffs in play being removed from the sector or reduced.
A 25% tariff on imported vehicles imposed early this month remains in place, but a separate 25% tariff on imported steel and aluminum was eliminated for the auto industry, and a tariff scheduled to take effect May 3 on imported auto parts was shrunk via reimbursements, per a White House executive order.
The White House said President Donald Trump signed the executive order Tuesday around tariffs affecting the sector, the same day he visited auto manufacturing hotbed Michigan for a rally marking the first 100 days of his second term.
Automakers have been urging Trump to grant them tariff relief, saying the duties will drive up vehicle prices and cut both their U.S. and overseas sales before any state-side auto manufacturing jobs would be created.
Industry forecasters have said at least part of trade tariff cost would be passed on to consumers. J.D. Power estimated mid-April that vehicle price hikes would settle at an average of 5%, or $2,300 per unit, by the fourth quarter. Cox Automotive analysts have foreseen price increases of 10% or more.
The tariff relief conceivably will curtail the impacts on U.S. automakers.
The auto parts tariff will come with reimbursements of up to the equivalent of 3.75% of a U.S.-made car’s value for a year for vehicles assembled before May 1, 2026, then a 2.5% equivalent reimbursement in the second year before being phased out, according to news reports.
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