The administration of US President Donald Trump is considering whether to reduce certain tariffs targeting the auto industry that automaker executives have warned would deal a severe blow to profits and jobs.
One measure would spare automobiles and parts already subject to tariffs from facing additional duties from levies on steel and aluminum imports, people familiar with the matter said.
That would eliminate so-called “stacking” of levies.
Photo: Reuters
Another option being studied would fully exempt auto parts that comply with the US-Mexico-Canada trade pact (USMCA), some of the people said.
Those components do not currently face tariffs, but the administration had planned to tax the non-US share of those parts from Canada and Mexico. Fully sparing those parts would abandon that approach, which would present a potentially herculean logistical challenge.
The Financial Times reported that the Trump administration is considering reducing tariffs on auto parts — and that it might also exempt auto parts bought from China from a 20 percent tariff applied to the nation over a dispute over fentanyl.
The proposals and options remain under consideration, and Trump has not signed off, said the people, who asked not to be identified discussing the matter, because it is not public.
Trump’s tariff policies often change quickly, underscoring the fluidity of policy deliberations, but the discussions offer a signal that the administration is considering ways to narrow the scope of levies affecting the auto industry.
If adopted, the changes would be a significant reprieve for automakers, who have warned of devastating consequences from the tariffs, including higher vehicle prices, production cuts and potential job losses. The industry relies on deeply integrated supply chains spanning North America for the vehicles they sell in the US.
Trump has separately applied tariffs on goods from Canada and Mexico, although exempted USMCA-compliant goods.
The tariffs on autos and auto parts were poised to heavily disrupt the integrated continental supply chain. The US plan, as initially announced, offered something of an olive branch by applying tariffs only on the non-US share of USMCA-traded vehicles, and delaying a potential tariff on parts traded under the pact.
The White House did not respond to a request for comment on Wednesday night.
Asked if he was considering changes to auto tariffs, Trump on Wednesday indicated he was not, while also suggesting he might even increase levies on the Canadian auto sector.
“No, we’re not considering it now, but at some point it could go up,” Trump said. “Because, again, we don’t really want Canada to make cars for us. To put it bluntly, we want to make our own cars, and we’re now equipped to do that.”
Detroit’s automakers for weeks have lobbied the administration to exclude certain low-cost car components from planned tariffs.
Company representatives have told the administration that broad parts duties would drive up costs, and trigger profit warnings and layoffs that would counter Trump’s goal of rebuilding US manufacturing.
Trump plans to travel to Michigan next week.
Automakers are expected to shoulder much of the tariff burden, at least initially, with margins at many parts manufacturers already running thin.
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