Trump stated that he is exploring the possibility of a temporary exemption from tariffs on imported autos and auto parts to give auto companies more time to establish production bases in the USA.
President Trump said on Monday that he is considering temporary exemptions from tariffs on imported autos and auto parts to give auto companies more time to establish production bases in the USA.
"I am considering helping auto companies address this issue," Trump said to reporters on Monday in the Oval Office. "They are switching to auto parts produced in Canada, Mexico, and Other places, and they need a bit of time because they want to produce here."
When asked about which products he is considering excluding in the short term, Trump did not specify how long the potential suspension or reduction of auto tariffs would last.
Trump's comments could provide relief to auto manufacturers that are struggling due to tariffs on imported autos and light trucks, but they also inject more uncertainty into his tariff plan. After Trump made his comments, $General Motors (GM.US)$ 、$Ford Motor (F.US)$The company's and Chrysler's parent company's stock prices hit a new intraday high, reversing earlier declines.$Stellantis NV (STLA.US)$Taxes on auto imports could potentially increase prices for consumers in the USA, and severely disrupt the auto supply chain spanning the USA, Canada, and Mexico.
Trump believes that imposing tariffs is necessary to revitalize manufacturing in the USA.
Trump's 25% tariff on complete vehicles, with the tariffs on Auto Parts taking effect no later than May 3. He has already included an exemption clause in the tariffs imposed on Canada and Mexico, exempting cars that meet existing North American trade agreement requirements based on domestic manufacturing content.
The three major Auto Manufacturers in Detroit have been lobbying the Trump administration for weeks to exclude certain low-cost Auto Parts from the tariff plan.
According to knowledgeable sources, Ford, General Motors, and Stellantis have acknowledged their willingness to pay tariffs on complete vehicles as well as large components like engines and transmissions.
Mitch Zajac, an auto and supply chain attorney at the Detroit law firm Butzel Long, stated, "There must be some kind of pathway to achieve the changes the government hopes to see. If we have to do it this way, it cannot be done all at once."
Company representatives have informed the government that widespread tariffs on auto parts will increase costs, leading to profit warnings and layoffs, which goes against Trump's goal of rebuilding the USA's Auto Manufacturers industry. It is expected that Auto Manufacturers will bear most of the tariff burden, at least initially, and many auto parts manufacturers are already operating on thin margins.
According to a report by the Anderson Economic Group this month, tariffs could increase the cost of some imported luxury cars by up to 0.02 million dollars. Even in the low-end market, small cars and crossovers with a higher domestic content could see cost increases of 2,500 to 4,500 dollars.
The group's report estimates that the annual impact on USA Consumers in the first year could reach 30 billion dollars. This will have a significant impact on the economic affordability of consumers, as buyers are already facing the challenge of an average new car price approaching 0.05 million dollars.
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