US Auto Tariffs Are Lowered, But Worries Persist

US President Donald Trump has signed two orders to reduce the negative impact of tariffs on cars, offering manufacturers cost refunds and exemptions from additional duties on materials.

Investors felt relief as Trump’s unpredictable trade policy raised concerns about new 25 percent tariffs on imported auto parts. He visited Michigan, a key state for the US auto industry, just before the tariffs were set to take effect and one day before his 100th day in office during his second term, according to Reuters.

As part of the latest concessions, Trump has decided to give automakers two years to increase the share of American components in vehicles assembled in the U.S. By April 2026, they will be allowed to offset tariffs on imported parts of up to 3.75 percent of the vehicle’s recommended price, and by April 2027, up to 2.5 percent of U.S. production.

Industry leaders have been pressing the administration for weeks since the announcement of steep tariffs. Many companies warn that these measures could disrupt auto manufacturing between the U.S., Canada, and Mexico. Trump wants to help companies struggling to obtain parts, stressing he doesn’t want to penalize them. However, the 25 percent tariff on eight million imported vehicles annually remains unchanged.

Autos Drive America, which represents foreign manufacturers such as Toyota, Volkswagen, and Honda, said Trump’s order brought some relief but that “more must be done” for the U.S. auto industry to truly recover. The Canadian Chamber of Commerce said the move did not meet the needs of companies operating in the deeply interconnected North American auto industry.

Meanwhile, Commerce Secretary Howard Lutnick told CNBC that the first trade deal had been reached with a foreign country, but he would not name it until it had been approved by the country’s prime minister and parliament. Trump indicated that India was making progress in negotiations and that he expected a deal soon.

The Trump administration plans to conclude 90 trade deals in the next 90 days, during a “pause” in the implementation of reciprocal tariff policies. The goal is to reduce the large US trade deficit, which reached a record in March as many rushed to import goods before the tariffs took effect.

• Also See: Japanese Cars In The US Showed Significant Boost In Sales Despite Tariffs