U.S. tariffs on imported cars and auto parts were supposed to go into effect Saturday.
But, as he has on other tariff decisions the last few weeks, President Donald Trump backed off on those decisions.
On Tuesday, Trump s signed executive orders scaling back his 25 percent tariffs on imported automobiles and auto parts, sparing foreign auto parts from facing a double hit from the president’s auto tariffs and his previously imposed import taxes on foreign metals, instead charging the highest available rate per product.
In addition, the administration will let automakers apply for 15-percent price offsets in the first year of the tariffs and a 10 percent offset in the second year in a bid to get companies to increase domestic production of automobiles, according to multiple media outlets.
The cost reductions for carmakers — which the administration is calling offsets and distinguishing from rebates — will be phased out in the third year. After the end of the second year, the 25 percent import tax on auto parts will be levied in full, according to a report in The Hill.
On a call with reporters hours before Trump signed the executive orders, White House and Commerce Department officials said that the 15 and 10 percent reductions would be applied to the manufacturer’s recommended car price.
Walking through the calculations, officials multiplied the 15 and 10 percent offsets to the 25 percent auto part tariff rate, arriving at effective tariff reductions of 3.75 percent and 2.5 percent.
The average value of the offset would be around $1,500 per vehicle, they said, according to The Hill.
Auto parts covered under the U.S.-Mexico-Canada Agreement (USMCA), which were exempted from previous tariff increases, would continue to be exempt, officials said.
Trump has made several similar modifications and reversals to the tariffs he rolled out on his so-called “Liberation Day” April 2.
Auto executives praised the move, saying it would help companies “invest even more in the U.S. economy,” Mary Barra, CEO of General Motors, said in a statement. “We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together.”
