Lutnick Rolls Out Auto Tariff Relief As US Pushes To Reshore Supply Chains

Headlines:

• LUTNICK: TARIFF RELIEF AVAILABLE TO ALL U.S.-BUILT VEHICLES
• LUTNICK: TARIFF WILL APPLY TO FOREIGN CAR MAKERS BUILDING CARS IN THE U.S
• LUTNICK:  TARIFF RELIEF TO BE PHASED IN OVER THREE YEARS TO ALLOW AUTOMAKERS TO PRODUCE SUPPLY CHAINS IN THE U.S.
• LUTNICK: ALL CARS THAT ARE FINISHED IN U.S. THAT HAVE 85% DOMESTIC CONTENT WILL HAVE NO TARIFFS
• LUTNICK: MANUFACTURERS OF U.S.-BUILT AUTOS WILL GET 15% OFFSET FOR VALUE OF THOSE VEHICLES AGAINST PARTS IMPORTS
• LUTNICK: AUTO MANUFACTURERS WILL PICK THE HIGHEST TARIFF THAT COMES WITH THEIR GOODS AND THEY WILL ONLY PAY ONE
• LUTNICK: AUTO MAKERS WILL PAY EITHER STEEL OR AUTO TARIFF, WHICHEVER IS HIGHER
• LUTNICK: TWO YEARS WAS AGREED TIME TO GIVE MANUFACTURERS SUFFICIENT TIME TO BUILD UP SUPPLY CHAIN
• LUTNICK: THERE IS NO THIRD YEAR OF RELIEF

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Global stocks were steady overnight, with U.S. equity futures marginally higher, as sentiment improved following reports that President Trump plans to ease tariffs on foreign auto parts used in U.S.-made vehicles. The news comes as Trump marks his first 100 days in office, ahead of a rally in Michigan scheduled for this evening.

The Wall Street Journal, citing multiple sources familiar with the plans, reported that the proposed tariff rollback would offer major relief to automakers producing vehicles within the U.S. borders. These companies have been battered by the trade war due to their deeply entrenched supply chains spanning Asia and Europe.

Sources added more color to what the tariff reprieve looks like:

The decision will mean that automakers paying Trump’s automotive tariffs won’t also be charged for other duties, such as those on steel and aluminum, according to people familiar with the policy.

The move would be retroactive, the people said, meaning that automakers could be reimbursed for such tariffs already paid. The 25% tariff on finished foreign-made cars went into effect early this month.

The administration will also modify its tariffs on foreign auto parts—slated to be 25% and effective May 3—allowing automakers to be reimbursed for those tariffs up to an amount equal to 3.75% of the value of a U.S.-made car for one year. The reimbursement would fall to 2.5% of the car’s value in a second year, and then be phased out altogether.

Commerce Secretary Howard Lutnick told WSJ in a statement about Trump’s move to ease the pain for automakers:

President Trump is building an important partnership with both the domestic automakers and our great American workers.

This deal will be a major victory for the president’s trade policy by rewarding companies who are already manufacturing domestically, while providing a runway to manufacturers who have expressed their commitment in investing in America and expanding domestic manufacturing.

In a separate statement to Bloomberg, Lutnick said:

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.

Trump’s trade war is an urgent move to shift critical supply chains out of China, either by relocating them to a friendlier shore or reshoring them.

Ford CEO Jim Farley commented on the WSJ report:

Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers and consumers.

We will continue to work closely with the administration in support of the president’s vision for a healthy and growing auto industry in America. Ford sees policies that encourage exports and ensure affordable supply chains to promote more domestic growth as essential. 

This news comes ahead of Trump’s trip to Michigan to celebrate the first 100 days of his second term in office. The president will speak at Macomb Community College in Warren, about 20 miles north of Detroit, around 6:00 p.m. local time.

Ahead of Trump’s first 100 days, crazed Michigan Democratic Rep. Shri Thanedar filed articles of impeachment against the president, stating:

I have introduced articles of impeachment against President Trump. When Trump ignores the Constitution, Congress, and the courts, he is not ‘fighting for America.’ He is tearing it down and endangering our democracy.

Trump’s pivot on auto tariffs represents the latest development in his ever-changing trade strategy to friend-shore or re-shore critical supply chains.

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SOURCE

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