President Trump is set to ease the impact of automotive tariffs by partially rolling back levies on imported car parts, sources familiar with the matter said.
The move means automakers facing Trump’s 25% tariff on imported cars — which was implemented earlier this month — will not also have to pay separate tariffs on materials such as steel and aluminum, individuals briefed on the policy told the Wall Street Journal.
The changes will be applied retroactively, allowing manufacturers to potentially receive refunds for tariffs already paid.
Tariffs planned for imported auto parts, originally set at 25% and scheduled to begin on May 3, will also be adjusted.
Automakers will be allowed reimbursement up to 3.75% of the value of each vehicle produced in the US during the first year.
In the second year, reimbursements would decrease to 2.5%, eventually phasing out completely.
These modifications come as Trump prepares for a rally near Detroit to mark 100 days since his return to office.
Trump’s administration has been in frequent discussions with automakers about tariffs, which are viewed by the president and his supporters as a necessary means to spur domestic manufacturing.
“President Trump is building an important partnership with both the domestic automakers and our great American workers,” Commerce Secretary Howard Lutnick told the Journal.
“This deal will be a major victory for the president’s trade policy by rewarding companies who are already manufacturing domestically, while providing a runway to manufacturers who have expressed their commitment in investing in America and expanding domestic manufacturing.”
Automakers welcomed the decision, acknowledging its potential to significantly alleviate pressures caused by tariffs.
“Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers and consumers,” Ford CEO Jim Farley said in a statement.
“We will continue to work closely with the administration in support of the president’s vision for a healthy and growing auto industry in America.”
Farley added that his company “sees policies that encourage exports and ensure affordable supply chains to promote more domestic growth as essential.”
General Motors CEO Mary Barra also expressed approval, noting: “We appreciate the productive conversations with the president and his administration and look forward to continuing to work together.”
The mitigating measures aim to give automakers more time to transition supply chains to the United States, which aligns with Trump’s broader objective of boosting domestic manufacturing.
Automakers will be required to apply for the reimbursements, though the mechanism for how the refunds will be dispersed remains unclear, according to the Journal.
Analysts had warned that Trump’s initial 25% tariff could significantly raise vehicle prices.
Morgan Stanley projected an average increase of $6,000 per car, translating to a 10%-to-12% price hike for consumers.
Prior to implementing the tariffs, Trump cautioned automakers against raising vehicle prices.
Automakers are responding in varied ways to the Trump administration’s new 25% tariffs on imported vehicles, with several brands halting imports, raising prices, or shifting production to the US.
While some companies, like Hyundai and Mercedes-Benz, are temporarily absorbing costs or delaying price hikes, others, including Audi, Jaguar Land Rover and Mitsubishi, are pausing deliveries altogether.
The evolving landscape reflects industry-wide uncertainty, with carmakers balancing tariff impacts, consumer pricing, and long-term supply chain strategy.
The administration’s move to soften auto tariffs follows recent efforts by Trump to temper other aspects of his aggressive trade policies, which triggered market volatility and lobbying efforts by businesses and international partners.
Earlier this month, Trump temporarily paused several tariffs introduced shortly before, and scaled back rhetoric and tariffs aimed at China after imposing substantial levies on Chinese imports.
