TMTPOST -- U.S. Commerce Secretary Howard Lutnick onfirmed late Monday that President Donald Trump will ease tariffs hitting the auto industry.
Credit：Xinhua News Agency
Reuters cited Lutnick that Trump will reduce impacts of auto tariffs and is building “an important partnership” with American automakers. The Trump administration will alleviate some duties on auto parts made outside U.S. in domestically manufactured cars and keep tariffs on cars made abroad from piling on top of other ones, a Reuters report cited officials.
Lutcick confirmed a deal has been reached with automakers to ease tariffs, according to a statement obtained by CNN. “This deal is a major victory for the President’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing,” Lutnick said in the statement.
The statement didn’t offer any details of the deal. Reuters learned from a White House official that the deal would be made public on Tuesday, when Trump is set to travel to Michigan, the heart of the U.S. automobile industry.
Earlier Monday, the Wall Street Journal reported Trump is expected to prevent existing duties on foreign-made cars from stacking on top of other U.S. tariffs and mitigating some levies on foreign parts used in U.S.-made vehicles.
The decision means automakers paying automotive tariffs will not be charged for other duties, such as those on steel and aluminum, the Journal cited sources. It was said that the U.S. government will also allow automakers to be reimbursed for 25% tariffs on auto parts up to an amount equal to 3.75% of the value of a car manufactured in the country for one year. The reimbursement would fall to 2.5% of the car’s value in the following year, and then to be phased out.
Trump was reported last week to consider exempting automakers from some tariffs. The Financial Times (FT) suggested on April 23 Trump will retreat on his most aggressive tariffs amid fears about surges in U.S. car prices, disruption of supply chains and job losses.
It was reported Trump is set to exempt car parts from the tariffs that the president is imposing on Chinese imports to counter fentanyl production, as well from those levied on steel and aluminum — a “destacking” of the duties.
The exemption would not affect a 25% tariff imposed on all imports of cars made outside U.S., and would leave in place a separate 25% levy on auto parts, which is due to come into force on May 3, according to the FT report.
White House on April 23 confirmed Trump is considering exemptions for automakers from some tariffs announced by his administration.
Trump late March signed an executive proclamation to impose a 25% tariff on all automobile imports, effective on eastern daylight time April 3 at 12:01 a.m. He said that the tariff hit “all cars that not made in the United States”, and if the cars are “made in the United States, it’s absolutely no tariff.”The president confirmed on April 2 the auto tariffs entered effect as scheduled.
The exemptions, if they are materialized could be a major reprieve for automakers. Wall Street and automotive analysts expected the auto tariffs would lead to a drop in vehicle sales in the millions, higher new and used vehicle prices, and increased costs of more than $100 billion for the industry.