Trump eases tariffs on imported auto parts through executive order

President Donald Trump signed an executive order Tuesday afternoon softening tariffs on imported cars and car parts, in a reprieve for auto manufacturers that had protested the levies.

While 25 percent taxes will remain on imported vehicles, the White House is changing the tariffs to ensure that they are not “stacked” on top of other levies, such as for the steel and aluminum commonly used in automobiles, according to senior Commerce Department officials. Auto companies that finish building cars in the United States will also get some relief from tariffs on imported auto parts for two years.

“It’s a little bit of help,” Trump said at the White House on Tuesday before boarding a flight to Michigan, where he held a rally to mark the first 100 days of his second term. “It’s a little transition.”

The executive order marked the White House’s latest retreat in recent weeks on steep levies imposed on imports from foreign trading partners. The White House has faced criticism and swooning financial markets, leading it to announce a three-month delay of some of the steepest tariffs, and temporary exemptions from import duties for some electronic products benefiting large tech firms, including Apple, HP and Dell.

U.S. automakers had said the auto levies as previously announced would raise production costs and hit their profits. The auto industry is one of the biggest drivers of manufacturing jobs in the U.S. economy. Stellantis, one of Detroit’s Big Three automakers, had announced temporary layoffs because of the tariffs.

The executive order follows in-depth conservations between the Trump administration and domestic auto manufacturers, said a senior administration official who spoke on the condition of anonymity to reveal internal deliberations.

Auto executives praised the move.

“We’re grateful to President Trump for his support of the U.S. automotive industry and the millions of Americans who depend on us,” Mary Barra, CEO of General Motors, said in a written statement. “We believe the President’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy. We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together.”

The reprieve trims tariffs for both foreign and domestic automakers that are already subject to the 25 percent tariffs on imported steel and aluminum that affects the overall cars as well as auto parts.

Trump’s China tariffs will continue to be added on top of auto and parts tariffs.

During the first year of tariffs, automakers will be reimbursed tariffs on imported auto parts of up to 3.75 percent of the retail price tag of a U.S.-made car. The relief narrows in the second year and stops in the third year.

Auto parts from Canada and Mexico that abide by the United States-Mexico-Canada trade agreement will remain duty-free. But new levies on imported auto parts are scheduled to take effect Saturday.

The relief for auto components will also benefit foreign car manufacturers as long as they build their cars in the United States, a provision designed to encourage the companies to bring auto factory jobs to the United States.

The original 25 percent tariffs, announced in March and in effect since April 3, were poised to add an average of $6,000 on cars imported from outside North America and $3,600 on vehicles imported from Canada and Mexico—higher manufacturing costs that will be passed on to car buyers, according to Cox Automotive.

The reduced tariffs are not expected to result in substantial relief from higher car prices that are beginning to kick in from Trump’s tariffs, according to Erin Keating, a Cox industry analyst. She said easing tariffs won’t change “how pricing is done by manufacturers, at least in the short term.”

White House officials say the tariffs are necessary to usher in the return of lost manufacturing jobs. The goal is to incentivize Americans to buy American-made cars and force more foreign automakers to build plants in the United States.

At a White House press briefing Tuesday, Treasury Secretary Scott Bessent addressed the change, saying Trump is committed to “bringing back auto production to the U.S.”

“We want to give the automakers a path to do that quickly, efficiently and create as many jobs as possible,” Bessent said.

The reduced tariffs will be retroactive, administration officials said, meaning automakers that have already paid the higher tariffs will get some of that money back.

Trump’s auto-sector tariffs threaten an industry dependent on cross-border supply chains. General Motors, Ford and Stellantis vehicles sold in the U.S. are built from supply chains that zigzag across North America and receive parts from Asia and Europe.

The tariffs will hit automakers differently depending on how much companies relies on foreign supply chains, Keating said. Cox Automotive analysis suggests GM and Stellantis will be hit harder than some of their domestic competitors because they assemble more vehicles outside the U.S., including in Mexico.

Ford and Tesla rely less on foreign auto production. But Tesla CEO and Trump adviser Elon Musk said he wasn’t a fan of the higher tariffs, and called on Trump to reverse them.

Generally, the auto industry took the tariff reprieve news positively. Shares of Stellantis and Ford were both up. GM traded down; the company on Tuesday announced lower first-quarter profits, due to tariffs.

“We look forward to our continued collaboration with the U.S. Administration to strengthen a competitive American auto industry and stimulate exports,” Stellantis Chairman John Elkann said in a statement.

Ford did not respond to a request for comment.

Shawn Fain, president of the United Auto Workers, the country’s largest union representing autoworkers, declined to comment on the revised tariffs.