Trump Signs Order Easing Auto Tariffs, Adds Manufacturer Relief

President Donald Trump signed an executive order on Tuesday aimed at easing the financial burden of US automotive tariffs, according to White House officials. The order prevents overlapping tariffs on imported vehicles and components and establishes a temporary reimbursement program for manufacturers affected by prior duties.

The 25% tariff on imported vehicles remains unchanged. However, the directive exempts such vehicles from additional tariffs on raw materials like aluminum and steel when already incorporated into finished products. Additionally, automakers will be reimbursed for some past tariffs paid on auto parts.

A White House spokesperson announced that manufacturers could receive reimbursements of up to 3.75% of the value of US-manufactured vehicles in the first year, decreasing to 2.5% in the second year before being phased out.

“This is a significant victory for the President’s trade agenda. It rewards companies manufacturing domestically while providing support to those committing to invest in America,” said Secretary of Commerce Howard Lutnick.

“President Trump has met with both domestic and foreign automakers and is committed to bringing auto production back to the United States. This policy offers automakers a pathway to achieve that efficiently, creating jobs and strengthening the economy,” added Treasury Secretary Scott Bessent.

The order follows extensive lobbying by industry stakeholders. Last week, six major automotive trade groups, including the Alliance for Automotive Innovation, urged the administration to reconsider planned 25% tariffs on imported auto parts set to take effect by May 3. In a joint letter to officials, including US Trade Representative Jamieson Greer and Secretary Lutnick, the groups warned of potential production disruptions and bankruptcies.

“Tariffs on auto parts will disrupt the global supply chain, leading to higher prices for consumers, reduced sales, and increased costs for servicing vehicles. Most suppliers are not equipped for such a disruption, and many face production stoppages, layoffs, and bankruptcy,” the coalition stated.

Major US automakers welcomed the relief. General Motors CEO Mary Barra commented, “The President’s leadership is leveling the playing field for companies like GM, enabling greater investment in the US economy.” Ford CEO Jim Farley added, “These decisions will mitigate the impact of tariffs on automakers, suppliers, and consumers.”

Stellantis Chairman John Elkann expressed similar sentiments: “While we assess the policy’s impact on North American operations, we look forward to collaborating with the administration to strengthen the American auto industry and boost exports.”

Despite the relief, uncertainty persists. GM canceled its 2025 financial guidance and delayed its Q1 investor call to evaluate the new tariff policy’s implications. “The evolving situation could have significant long-term effects,” said GM CFO Paul Jacobson. GM also suspended stock buybacks due to regulatory volatility.

Data from S&P Global Mobility reveals that over one-third of GM’s North American vehicle production takes place in Mexico or Canada, with more than 50% of components for US-assembled vehicles being imported. 

Market reaction was mixed. GM shares fell more than 1% Tuesday morning, while Ford, Toyota, Stellantis, and Honda saw moderate gains. The executive order was signed during President Trump’s visit to Michigan, marking the first 100 days of his second term.