President Donald Trump's administration will move to reduce the impact of his automotive tariffs on Tuesday by alleviating some duties imposed on foreign parts in domestically manufactured cars and keeping tariffs on cars made abroad from piling on top of other ones, officials said.
"President Trump is building an important partnership with both the domestic automakers and our great American workers," Commerce Secretary Howard Lutnick said in a statement provided by the White House.
"This deal is a major victory for the President's trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.”
The Wall Street Journal, which first reported the development, said the move meant car companies paying tariffs would not be charged for other levies, such as those on steel and aluminum, and that reimbursements would be given for such tariffs that were already paid.
A White House official confirmed the report and indicated the move would be made official on Tuesday.
Trump is traveling to Michigan on Tuesday to commemorate his first 100 days in office, a period that the Republican president has used to upend the global economic order.
The move to soften the effects of auto levies is the latest by his administration to show some flexibility on tariffs, which have sown turmoil in financial markets, created uncertainty for businesses and sparked fears of a sharp economic slowdown.
Automakers said earlier on Monday they were expecting Trump to issue relief from the auto tariffs ahead of his trip to Michigan, which is home to the Detroit Three automakers and more than 1,000 major auto suppliers.
Last week, a coalition of U.S. auto industry groups urged Trump not to impose 25% tariffs on imported auto parts, warning they would cut vehicle sales and raise prices.
Trump had said earlier he planned to impose tariffs of 25% on auto parts no later than May 3.
"Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable," the industry groups said in the letter.
The letter from the groups representing General Motors (GM.N), Toyota Motor, Volkswagen (VOWG.DE), Hyundai (005380.KS) and others, was sent to U.S. Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent and Commerce's Lutnick.
"Most auto suppliers are not capitalized for an abrupt tariff induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy," the letter added, noting "it only takes the failure of one supplier to lead to a shutdown of an automaker's production line."
