United States President Donald Trump has signed an executive order that softens the impact of his automotive tariffs, giving up on the weeks of intense lobbying by automakers, parts suppliers and car dealers who warned that excessive tariffs could increase car prices, leading to factories and job loss.
Under the executive order, imported cars received a break from the separate aluminum and steel tariffs, an attempt to prevent multiple rates from accumulating.
“Now I have determined that, as these rates apply to the same article, these rates should not have a cumulative (or ‘accumulate’ effect on each other) because the tax rate resulting from such accumulation exceeds what is necessary to achieve the intended political objective,” Trump said in order.
In addition, government officials claim that Trump will change 25% tariffs on automotive parts, which were expected to take effect on May 3, allowing car manufacturers who produce and sell complete vehicles in the US claim up to 3.75% of the value of a vehicle made in America, according to a senior employee of the department of commerce.
The discount will decrease in one year to up to 2.5% of the car value and will be eliminated the following year, an attempt to motivate domestic manufacturing. The discount will be available for cars produced after April 3.
Trump softened his position before a trip to Michigan, where he plans to mark the first 100 days of his second term in the White House with a speech in Macomb County, a conservative Detroit suburb that houses many of the middle -class workers the president says his fares aim to help.
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Although Trump’s latest changes relieve the financial burden of car manufacturers, suppliers and dealers, it is still early to know how much financial relief they will really bring.
The industry still faces a 25% tariff over imported vehicles that threatens to significantly increase industry costs and press supply chains.
The industry also awaited government details on how to calculate the costs of tariffs for automotive parts, generating confusion and forcing some factories to pause production while automakers analyze different scenarios and discuss suppliers about who will bear most new costs.
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This instability was evidenced on Tuesday (29), when General Motors canceled its guidance For the year and postponed a call with investors to give executives time to digest the new rules and their impact on financial perspectives.
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So far, automakers have maintained stable prices while trying to calm concerns that the 25% Trump rate on imported cars will increase costs in thousands of dollars. The fear that these tariffs could raise prices led to an increase in sales in the first quarter.
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