As automakers are bracing themselves for tariffs on import auto components that are about to take effect, the U.S. President Donald Trump signed an executive order, providing a relief measure that would free these vehicle companies from some burden.
Several automakers around the world are being affected by many of Trump’s tariffs, such as the 25% duty on imported car, steel, and aluminum. And on May 3, these vehicle companies would have to face the 25% levy on auto parts, which would increase the production cost even further.
This relief will provide partial reimbursements to qualified automakers, reducing the “stacking” effect of multiple duties. Still, the tariff on auto and its parts remain. The automakers that are eligible could receive the reimbursements worth 3.75% of all vehicle’s value assembled in the U.S. in between April 3, 2025 to April 30, 2026.
Furthermore, the reimbursements will decrease to 2.5% of the value of the U.S.- assembled vehicle between May 1, 2026 to April 30, 2027. As for the process of receiving these reimbursement, the Trump administration has not released the details yet.
However, the administration did mention that these reimbursement rates are based on the 25% tariff multiplied to 15% and 10% of the value of a U.S.-assemble vehicles in the first year, and second year, respectively.
This relief came after several automakers and auto policy groups lobbying with the Trump administration. They stated that the upcoming components tariff could affect the U.S. auto industry negatively while mentioning the current distress among the suppliers.
Following the relief announcement, the groups and several automakers’ executives, such as those from General Motors, Autos Drive America, Ford, and Stellantis, announced their gratitude and welcoming messages.
