The auto industry finally received some clarity from the White House, with a few exemptions coming to President Trump’s auto tariffs.
Confirming an earlier report from the Wall Street Journal, the government will aid automakers by preventing tariffs on foreign-made cars stacking on top of other tariffs currently imposed by the administration, a senior commerce department official said on a call with reporters.
This means automakers paying Trump’s auto tariffs on imports won’t also be charged for other duties. The White House is calling it “de-stacking,” meaning automakers will pick the highest tariff that applies to them and only pay that one, meaning no steel or aluminum tariffs or Chinese fentanyl tariffs on top of the existing tariff on foreign autos.
The move would also be retroactive to April 2nd, when the tariffs began, meaning that automakers could be reimbursed for tariffs already paid. The changes will become official when President Trump signs an executive order later on Tuesday, with more details released at that time, according to the spokesperson.
“Automakers will pay either steel or auto tariff, whichever is higher, and any rebates applied will be paid from tariff revenue, so no cost to the government,” the department official said.
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Furthermore, tariffs on auto parts, coming on May 3rd, would also be reimbursed up to an amount equal to 3.75% of the value of a US-made car for one year, then 2.5% the year after before phasing out.
The 3.75% calculation comes from multiplying 15%, which is the amount of foreign made-parts automakers said they would need time to replace, multiplied by the 25% tariff on foreign auto parts. This would be an “offset,” the official said, against the automaker’s tariff bill for importing those parts.
In the second year of the plan the 2.5% reimbursement comes from multiplying 10%, which the administration hopes will be the percent of foreign parts thats can’t be sourced yet in the US, multiplied by the 25% parts tariff.
The commerce department official said that these changes to the auto parts tariffs will help automakers get more runway to onshore their supply chain, expand their plants and hire more US workers.
“Finish your cars in America, and you win,” the official said.
DETROIT, MICHIGAN – JANUARY 9: Ford Motor Company President and CEO Jim Farley speaks with the media at a Ford “Detroit Proud” event at the 2025 Detroit Auto Show at Huntington Place on January 9, 2025 in Detroit, Michigan. The Detroit Auto Show opens to the public on January 11th and runs through January 20th .(Photo by Bill Pugliano/Getty Images) · Bill Pugliano via Getty Images
Automakers, in particular the Big Three, were seeking clarity from the White House on tariff exemptions, and the moves coming likely today are welcome, though still a burden comparatively speaking.
“Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers, and consumers. We will continue to work closely with the administration in support of the president’s vision for a healthy and growing auto industry in America. Ford sees policies that encourage exports and ensure affordable supply chains to promote more domestic growth as essential,” Ford CEO Jim Farley said in a statement.
Farley added: “If every company that sells vehicles in the US matched Ford’s American manufacturing ratio, 4 million more vehicles would be assembled in America each year.”
“Stellantis appreciates the tariff relief measures decided by President Trump,” Stellantis Chairman John Elkann in a statement. “While we further assess the impact of the tariff policies on our North American operations, we look forward to our continued collaboration with the US Administration to strengthen a competitive American auto industry and stimulate exports.”
WASHINGTON, DC – APRIL 23: Mary Barra, Chair and CEO, General Motors speaks on stage during The Semafor 2025 World Economy Summit – Day 1 at Conrad Washington on April 23, 2025 in Washington, DC. (Photo by Shannon Finney/Getty Images for Semafor) · Shannon Finney via Getty Images
GM, which earlier on Tuesday said investors could not rely on its 2025 profit guidance in light of tariffs, said it would conduct its Q1 earnings call on Thursday in order to parse the deal and give investors an update.
“We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together,” GM CEO and chair Mary Barra said in a statement.
Barclays analyst Dan Levy doesn’t see the exemptions as materially changing the tariff landscape for automakers.
“While the tariff softening is positive, we expect benefits to be somewhat limited vs. the greater tariff cost. The key tariff headwinds remain (25% vehicle tariff, 25% parts tariff, 20% China Fentanyl tariff),” Levy wrote in a note to clients.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
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