Trump considers exemptions to 25% auto parts tariffs for US carmakers

By Catherine Lucey  President Donald Trump said he is exploring possible exemptions to his tariffs on imported vehicles and parts to give auto companies more time to set up US manufacturing.  

“I’m looking at something to help car companies with it. They’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here,” Trump told reporters Monday in the Oval Office.  

The president’s comments could potentially bring relief to automakers reeling from his duties on car and light truck imports, but they also inject further uncertainty into his tariff plans. Shares of General Motors Co., Ford Motor Co. and Chrysler parent Stellantis NV hit session highs after Trump’s comments, reversing earlier declines. 

Levies on auto imports have threatened to raise prices for American consumers and wreak havoc on auto supply chains, which are deeply integrated across the US, Canada and Mexico. Trump has argued the duties are necessary to revive American manufacturing.  

Trump imposed a 25% tariff on fully built vehicles, with duties on parts set to take effect no later than May 3. His tariffs on Canada and Mexico already contain a carveout for vehicles with enough domestic content to meet requirements under the existing North American trade agreement. 

Detroit’s Big Three automakers for weeks have lobbied the Trump administration to exclude certain low-cost car components from planned tariffs. Ford, GM and Stellantis have conceded they’re willing to pay tariffs on completed cars and large components like engines and transmissions, according to people familiar with the matter.  

But company representatives have told the administration that broad parts duties would drive up costs by billions of dollars and trigger profit warnings and layoffs that would counter Trump’s goal of rebuilding US auto manufacturing.  

The US president also said Monday he anticipated rolling out tariffs on pharmaceutical imports in the “not too distant future.”

Trump’s frequent shifts on his sweeping tariff plans have sent confusing signals to markets, companies and trading partners grappling with how to engage a White House pledging to negotiate dozens of new agreements aimed at shrinking trade imbalances.  

The president on Monday touted exclusions for popular consumer electronics from 125% tariffs on China and a 10% baseline global tariff as beneficial for American tech giant Apple Inc. and also touted US investments by AI chipmaker Nvidia Corp. 

“Look, I’m a very flexible person, I don’t change my mind, but I’m flexible,” Trump told reporters.  

“I helped Tim Cook recently and that whole business,” the president continued, referring to the Apple chief executive officer. “I don’t want to hurt anybody. But the end result is we’re going to get to the position of greatness for our country.” 

Trump signaled over the weekend however that relief for tech products will be short lived, with him and his aides saying that those imports will eventually be hit with a different, sector-specific tariff.