President Donald Trump will sign a proclamation later Tuesday aboard Air Force One that will soften auto tariffs, senior White House officials confirmed.
Senior administration officials said Tuesday during a call with the media that the current 25% tariff leveled on imported cars will remain intact, but that other similar tariffs, such as tariffs on steel and aluminum, will not stack on top of the 25% auto tariff.
The announcement comes on Trump’s 100th day back in the Oval Office, which he will celebrate at a Michigan rally near Detroit — the U.S.’ former auto manufacturing capital.
In addition, domestic auto manufacturers that finish building cars in the U.S. will receive an offset for automobile part tariffs equal to 3.75% of the Manufacturer’s Suggested Retail Price (MSRP) of a manufacturer’s U.S. production for the next 12 months, and 2.5% of U.S. production for year following. The figures were calculated to reflect the tariff that would be owed when a 25% duty tax is applied to 15% of the value of a U.S.-assembled car, Fox Digital learned.
The 25% tariff on certain auto parts is set to take effect May 3, with administration officials explaining that auto manufacturers can use the offset credits against the tariff on auto parts. The administration stressed that the offset plan is not a rebate.
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“A part comes into the country and it gets tariffed,” a senior Commerce Department official said Tuesday. “And the auto manufacturers say, ‘Look, I sold a car, I have a credit. I have an offset amount of $1,600. Please use that $1,600 tariff offset amount against this particular part.’ So it will not cost the government any money whatsoever. It is basically allowing them to bring 15% foreign parts and put that in their cars.”
The plan intends to allow all domestic auto manufacturers “to grow their plants, to grow their employment, and to build more factories in America,” according to senior Commerce Department officials, by building in a two-year time frame to amp up the U.S. supply chain for the auto industry, according to senior administration officials.
The White House detailed that under the plan, if a car manufacturer builds a vehicle with 85% U.S. parts or parts made under the 2020 United States-Mexico-Canada trade agreement, they will effectively not owe tariffs.
All other autos and autoparts imported to the U.S. will face 25% tariffs.
