US President Donald Trump is planning to ease some tariffs on carmakers after weeks of pressure from the auto industry. This is another sign that Trump is stepping back from some of his tough trade policies.
The plan would remove tariffs on certain car parts that are being taxed because of two issues: China’s role in fentanyl exports and the earlier tariffs on steel and aluminium. This easing is called “destacking” the duties, according to two people familiar with the talks.
However, Trump will still keep a 25% tariff on all imported cars and a separate 25% tariff on car parts. The new parts tariff is set to start on May 3.
Although cars were already protected from the new “reciprocal” tariffs Trump announced on other countries, US carmakers have been asking for even more exemptions. They warned that the tariffs could raise car prices, mess up supply chains, and lead to job losses.
Recently, car industry leaders have spoken out strongly against the tariffs. John Elkann, chair of carmaker Stellantis, said the American and European car industries were being put at risk. Another auto executive said they asked the government not to hit them with so many tariffs, because it could hurt the whole industry.
The decision to give carmakers some relief shows that Trump is willing to protect certain industries after stock markets fell and experts warned that tariffs could cause a recession.
Earlier this month, Trump announced “reciprocal” tariffs up to 50% on most US trading partners. Later, he lowered those tariffs to 10% for 90 days. Last week, he also said that electronics like laptops and smartphones would be exempt from the tariffs, although they could face other taxes later.
Trump had also promised last week that there would be “help” for the auto industry. He previously made better deals for cars made in Mexico and Canada, as long as they followed the rules of the 2020 USMCA trade agreement. Cars and parts that follow USMCA rules will only have the 25% tariff applied to the non-US parts.
Also See: Is China About to Drop Major Tariffs on U.S. Goods? Find Out What This Means for the Global Economy!
Negotiators are now mainly working on making the tariff rules simpler — for example, making it easier to figure out where car parts come from.
Trump first put a 20% tariff on all goods from China to punish them for making fentanyl. Later, he added even higher “reciprocal” tariffs on Chinese goods, raising them up to 125%.
Car parts are exempt from these higher “reciprocal” tariffs. Right now, parts from China only face the 20% “fentanyl” tariff, plus any steel and aluminium duties, and the 25% vehicle tariff.
The White House has not commented on these plans.
