The White House is preparing to lower tariffs on the US auto industry, a move that will be a major victory for automakers who have been actively lobbying to prevent record import tariffs from taking effect.
According to informed sources, the US Department of Commerce plans to announce the extension of an arrangement that allows automakers to lower tariffs on imported auto parts by five years. Previously, the clause was set to expire in two years.
People familiar with the matter said the policy could be released as early as Friday, noting that similar tariff announcements have been delayed. It is expected that the policy will be detailed in the government documents officially implementing tariffs on imported trucks.
Previously, automakers including Ford Motor Company and General Motors, after months of lobbying for tariff relief from President Trump, have finally made concessions. Trump’s imposition of tariffs on imported cars, parts and materials such as steel and aluminum has led to higher costs for US automakers.
General Motors’ share price rose by as much as 3.8% in response to this news. Shares of Ford and Stellantis NV, the maker of Jeep, also increased.
Ford CEO Jim Farley said that the US-Japan trade deal has given rivals like Toyota a cost advantage of thousands of dollars per vehicle over US-made competing models, considering the lower labor and currency costs in the US. The framework reduced the import tariff on Japanese cars from 27.5% to 15%.
Previously, automakers could offset a portion of the 25% tariffs imposed by the United States on imported parts. Under this measure, automakers that produce and sell complete vehicles in the United States could apply for an offset amount up to 3.75% of the value of the vehicles manufactured in the United States. This offset amount will be reduced to approximately 2.5% after one year and will be cancelled in the second year.
Trump imposed a 25% tariff on imported vehicles earlier this year. The tariffs he imposed on Canada and Mexico respectively already contain an exemption clause that applies to vehicles with sufficient domestic components to meet the requirements of the existing North American trade agreement.
