President Trump is preparing to reduce the strike of his new car tariff by introducing measures that would prevent stacking duties and provide partial compensation to American auto factories for imported parts.
A car tariff, which entered into force on April 3, extends to auto parts on May 3, caused anxiety through the auto industry. However, Trump is expected to announce his postponement before Michigan’s visit – to Detroit three car makers and more than 1,000 main suppliers.
“President Trump is building an important partnership with both local auto manufacturers and our great American workers. This deal is a great victory for the president’s commercial policy through the bonus of locally manufactured companies, while providing the runway to the manufacturers who expressed their commitment to investing in America and expanding their domestic manufacture.”
Under the expected changes, auto factories will be allowed to receive partial payment based on the value of their car production in the United States. This policy will also be applied retroactively, which means that manufacturers can recover some of the fees they have already incurred since the definitions were submitted. In addition, auto imports will not be hit using many drawings, such as a tariff over steel and aluminum.
“We believe that the president’s leadership is helping to settle the field of play for companies like General Motors and allow us to invest more in the American economy,” said Marie Para, CEO of General Motors, with expected relief.
The move comes at a critical time for UK auto manufacturers. The United States is the second largest export market for British-made vehicles, which represents 16.9 per cent of exports in 2024-which amounts to 100,000 vehicles -7.6 billion pounds, according to the SMM Car Manufacturers Association.
A recent study by the American International Trade Committee warned that the customs tariff by 25 percent can reduce car imports by about 75 percent, which poses a serious threat to the UK car sector. Some UK car makers already feel pressure: Jaguar Land Rover stops the shipments of British vehicles built to the United States for a month because they are working to manage repercussions of new duties.
Although Trump’s expected adjustments will reduce the immediate pressure on American manufacturers, uncertainty remains for international exporters, who continue to watch closely for more developments.
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