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Donald Trump visited the US industrial heartland on Tuesday to tout another step back from his trade war, as he offers more tariff relief for some of the world’s biggest carmakers.
The president is sparing the manufacturers from some of his steepest duties and offering those that make their vehicles in the US small rebates to offset the cost of the levies. Carmakers importing parts will also avoid the administration’s tariffs on steel and aluminium.
“I’m giving them a little bit of a break,” Trump told a crowd of supporters in Michigan on Tuesday evening. “I want them to make their parts here. But I gave them a little bit of time.”
“We give them a little time before we slaughter them if they don’t do this right,” he added, to cheers from the crowd.
Trump’s moves were formalised in an executive order on Tuesday that the president signed ahead of his trip to Michigan, a hub of US auto manufacturing, where he celebrated his 100th day in office.
The relief comes just four days before the administration was due to impose a 25 per cent tariff on imported car parts. A separate 25 per cent tariff on all imports of foreign-made cars was imposed earlier this month and included some exemptions for Mexico and Canada.
A senior commerce department official said the alterations to Trump’s tariffs on cars were “designed to allow all of the domestic auto manufacturers to grow their plan, to grow their employment and to build more factories in America”.
The Financial Times first reported Trump’s new car tariff relief plan last week. The president’s trade war has caused alarm across the car industry about the extra costs it faces to increase production in the US.
Although Trump’s executive order simplifies his tariff regime for car parts, manufacturers will still be subject to a 20 per cent tariff that he has applied to all imports from China.
Parts from Mexico and Canada that are compliant with the rules of the 2020 USMCA trade agreement will remain tariff-free. Non-compliant vehicles will face a maximum tariff of 25 per cent.
The tariff rebate in the executive order allows carmakers that assemble their vehicles in the US to reclaim up to 3.75 per cent of its value for the next year, according to a senior commerce department official. It will drop to 2.5 per cent from May 1 2026 and be phased out completely on April 30 2027.
The softening of the tariffs follows lobbying by industry to mitigate their costs and policy uncertainty. Carmakers including General Motors, Volvo Cars and Porsche have pulled or drastically lowered their profit guidance.
The heads of Ford, GM and Stellantis all welcomed the relief measures, although some executives complained that the tariff structure remained too complex.
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“We look forward to our continued collaboration with the US administration to strengthen a competitive American auto industry and stimulate exports,” Stellantis chair John Elkann said.
GM chief executive Mary Barra said: “We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest more in the US economy.” Ford said Trump’s decisions would “help mitigate the impact of tariffs on automakers, suppliers and consumers”.
Earlier on Tuesday, GM abandoned its previous profit guidance and temporarily halted share buybacks, blaming tariff uncertainty.
Additional reporting by Myles McCormick in Washington
