On April 29, 2025, President Donald Trump signed an executive order to alleviate the impact of his auto tariffs, responding to lobbying from automakers, parts suppliers, and car dealers. The move comes after warnings that excessive levies could lead to higher car prices, plant shutdowns, and job losses in the U.S. auto industry.
Key Provisions of the Executive Order
The new order prevents imported automobiles from facing additional tariffs on aluminum and steel, preventing multiple tariffs from being imposed on the same product. Trump has also adjusted the 25% tariffs on auto parts, allowing carmakers who produce and sell completed automobiles in the U.S. to claim an offset worth up to 3.75% of a domestically made vehicle. This offset will decrease to 2.5% in one year and be eliminated the following year, incentivizing domestic manufacturing. The relief applies to cars produced after April 3, 2025.
Industry Reactions
The decision follows weeks of lobbying by the auto industry, which expressed concerns that Trump’s original tariffs could disrupt the North American production network integrated between the U.S., Canada, and Mexico. Automakers were particularly worried that tariffs would increase car prices by thousands of dollars and strain the supply chain.
In Michigan, Trump said the move was designed to give the auto industry “a little relief,” especially as companies work to bring more manufacturing back to the U.S. “We just wanted to help them… if they can’t get parts, we didn’t want to penalize them,” he said.
Broader Economic Strategy
This move is part of Trump’s broader strategy to show flexibility on his trade policies, which have sparked economic uncertainty. The decision to soften auto tariffs is seen as a response to growing concerns over potential economic slowdown and inflation.
The easing of auto tariffs provides a reprieve for the industry, allowing car manufacturers some breathing room to address their concerns.
