Donald Trump will take advantage of his visit to the heart of the U.S. industrial zone on Tuesday to take a step back from his trade war and launch more tariffs to some of the world's largest automakers.
The president will announce that he will retain some of the steepest responsibilities of the manufacturer and offer small discounts to those who make vehicles in the United States to offset the cost of taxes. Automakers that import parts will also be detrimental to government tariffs on steel and aluminum, officials said.
"We just want to help them enjoy this short-term transition," Trump told reporters outside the White House. "If they can't get the parts, we don't want to punish them."
Trump's move will be formalized in Tuesday's executive order, where the president is expected to sign during his trip to Michigan, a hub of U.S. auto manufacturing, where he will celebrate his 100th day.
The relief is only four days after the government imposes a 25% tariff on imported auto parts. Earlier this month, a 25% tariff was imposed on all imports of imported foreign-made cars, including some exemptions to Mexico and Canada.
A senior Commerce Department official said the changes to Trump's tariffs on cars "aim to allow all domestic automakers to develop plans, develop jobs and build more factories in the United States."
The Financial Times first reported on Trump’s new auto tariff relief plan last week. The president's trade war has raised alarms across the automotive industry, with regard to the additional costs facing increasing U.S. production.
Although Trump's executive order will simplify his tariff system on auto parts, manufacturers will still pay a 20% tariff that has been filed for all Chinese imports.
Parts of Mexico and Canada that comply with the 2020 USMCA Trade Agreement rules will not be tariffed. Non-compliant vehicles will face a maximum tariff of 25%.
Tariff discounts under executive orders will allow automakers assembled vehicles in the U.S. to recover up to 3.75% of their value next year, according to a senior Commerce Department official. It will drop to 2.5% from May 1, 2026 and will be completely phased out on April 30, 2027.
The softening of tariffs follows industry lobbying to alleviate its costs and policy uncertainty. Automakers including General Motors, Volvo Cars and Porsche have significantly reduced or significantly reduced their profit guidance.
The heads of Ford, General Motors and Stelantis all welcomed the relief measures, although some executives complained that the tariff structure was still too complex.
"We look forward to continuing cooperation with the U.S. government to strengthen the competitive U.S. auto industry and stimulate exports," said John Elkann, chairman of Stellantis.
"We believe the president's leadership is helping the competitive environment for companies like GM and allowing us to invest more in the U.S. economy," said Mary Barra, CEO of GM. Ford said Trump's decision will "help mitigate the impact of tariffs on automakers, suppliers and consumers."
Earlier Tuesday, GM abandoned previous profit guidance and temporarily stopped stock buybacks, blaming tariff uncertainty.