President Donald Trump has softened his stance on the tariffs in the automotive sector in recent weeks.
The auto industry was among the first to get carveouts from the original tariff package. Its supply chain is globally integrated and impossible to detangle in the short term.
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The U.S. auto industry has been lobbying the administration for months. In March, the President gathered some of the country’s top carmakers for a conference call, warning them not to raise prices in response to the tariffs, according to reports.
Days after the report was published, President Trump told NBC News that he “couldn’t care less” if automakers raised their prices and denied the Journal report.
When asked about his message to automakers, Trump said, “The message is ‘congratulations.’ If you make your car in the United States, you’re going to make a lot of money. If you don’t, you’re going to have to probably come to the United States because if you make your car in the United States, there is no tariff.”
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But to “make their cars in the United States,” automakers have to import products from around the world.
While car parts like sheet metal, outer closure components, and components for parts like the hood, fender, quarter panels, doors, and bumper do not fall under the new tariffs, other parts like the copper, ceramics, glass, and plastics sourced globally in the advanced driver-assistance systems do.
At least they did until Trump adjusted tariffs for the auto industry once again on Tuesday.
United Auto Workers’ union leadership has changed his mind about Donald Trump is recent months.
Image source: Bill Clark/Getty Images
Trump takes more heat off the automotive tariff fastball
The White House is keeping the 25% tax on finished imported vehicles but preventing other levies from “stacking” on top of it. Thus, carmakers won’t have to pay separate tariffs for imported steel and aluminum.
The Wall Street Journal originally reported that Trump was expected to move on auto tariffs today, and NBC News confirmed this with a comment from a White House official.
The move is retroactive, so any company that paid tariffs on these items in recent weeks will be reimbursed.
A separate group of 25% tariffs on imported auto parts is scheduled to go into effect May 3, but the administration is also modifying these taxes.
Automakers can be reimbursed for those tariffs up to 3.75% of the value of a U.S.-made car for one year. That reimbursement falls to 2.5% of the car’s value in the second year and is phased out completely after that, the Journal reported.
The announcement comes on the same day as Trump’s scheduled appearance in Michigan at a rally outside of Detroit, the heart of the American auto industry.
The auto industry has had nearly daily communication with Trump, according to reports, leading to a more bespoke approach to the industry’s tariffs.
Trump tariffs play well in Michigan
The concept of tariffs is pretty straightforward.
Importers pay a tax on goods they bring in from other countries, and those taxes are often passed on to the consumer in the form of higher prices. Theoretically, the point is to give domestic producers a leg up by making foreign goods costlier.
Related: Another Japanese automaker takes drastic action on tariffs
In March, United Auto Workers union leader Shawn Fain voiced his support for Trump’s tariffs despite him openly campaigning for Trump’s rival, Kamala Harris, during the campaign.
“We’re in a triage situation,” Fain told ABC News. “Tariffs are an attempt to stop the bleeding from the hemorrhaging of jobs in America for the last 33 years.”
More Automotive news:
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In January 1994, manufacturers produced more than 575,000 vehicles in the States; by January 2025, fewer than 100,000 vehicles were produced in the U.S., according to the U.S. Bureau of Economic Analysis.
Today, only about 53% of cars sold in the U.S. are made in the U.S., according to the U.S. Bureau of Economic Analysis.
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