By David Lawder and Andrea Shalal
WASHINGTON (Reuters) -U.S. President Donald Trump will sign an order on Tuesday giving automakers building vehicles in the U.S. relief from part of his new 25% vehicle tariffs to allow them time to bring parts supply chains back home, Commerce Secretary Howard Lutnick said.
Automakers would receive credits for up to 15% of the value of vehicles assembled in the U.S. that could be applied against the value of imported parts, Lutnick told reporters.
Autos and parts subject to the 25% Section 232 autos tariffs would no longer be subject to Trump’s other tariffs, including 25% duties on Canadian and Mexican goods, as well as 10% duties applied to most other countries.
Trump is traveling to Michigan on Tuesday to mark his first 100 days in office, during which the Republican president has upended the global economic order.
Softening the impact of auto levies is his administration’s latest move to show flexibility on tariffs which have sown turmoil in financial markets, created uncertainty for businesses and sparked fears of a sharp economic slowdown.
On Monday, automakers said they expected Trump to issue relief from auto tariffs ahead of his trip to Michigan, home to the Detroit Three automakers and more than 1,000 major auto suppliers.
General Motors, CEO Mary Barra and Ford CEO Jim Farley praised the planned changes.
“We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy,” Barra said.
Farley said the changes “will help mitigate the impact of tariffs on automakers, suppliers and consumers.”
But the uncertainty unleashed across the auto sector by Trump’s tariffs remained on full display Tuesday when GM pulled its annual forecast even as it reported strong quarterly sales and profit. In an unusual move, the carmaker also opted to delay a scheduled conference call with analysts until later in the week, after the details of tariff changes were known.
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.
Earlier, Trump had said 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 GM, Toyota Motor, Volkswagen, Hyundai 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.”
(Additional reporting by Jeff Mason and David ShepardsonEditing by Leslie Adler, Shri Navaratnam, Kim Coghill, Peter Graff and David Gregorio)
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