Trump plans temporary relief for auto tariffs, benefiting U.S. automakers

U.S. President Trump plans to announce on Tuesday, April 29, that he will temporarily ease the auto import tariffs implemented since early April. This policy will benefit all cars manufactured in the United States. Treasury Secretary Basen said that this policy "will greatly promote the return of domestic automotive production."

According to Agence France-Presse, the announcement comes as Trump prepares to hold a rally in Warren, near Detroit, to celebrate his first 100 days in office. Warren is a major center for the U.S. automotive industry.

White House spokesman Levitt told reporters on Tuesday: "The president will sign an executive order related to the auto industry tariff later today."

Treasury Secretary Basen added: "I won't disclose the details of the tariff relief, but it is certain that this policy will greatly promote the return of domestic automotive production." He emphasized that "our goal has always been to bring more high-quality manufacturing jobs back to the United States."

Since April 3, all imported vehicles into the United States have been subject to a 25% high tariff. The most affected include U.S.-based automakers, as many of their production bases are located in Mexico and Canada. Despite these two countries having free trade agreements with the United States, Trump still includes them in the global trade war.

Due to frequent cross-border production flows among the United States, Mexico, and Canada, car manufacturers still have opportunities to enjoy lower tax rates under specific conditions. In addition, auto parts are expected to be included in the tax scope no later than May 3.

As of 16:50 Coordinated Universal Time, Ford's stock price rose by 0.35%, while General Motors fell by 1.37%.

Two-year tax relief window

A U.S. Commerce Department official revealed that the measures Trump is about to announce will allow automakers to reduce their tariff burden over the next two years.

In particular, any vehicles manufactured and sold in the United States, regardless of whether the manufacturer is domestic or foreign, can deduct 15% of the recommended retail price in the first year and 10% in the second year from the 25% tariff during future imports.

The official emphasized that this policy is a "deduction" rather than a "refund." The two-year period was set based on feedback from the industry to give companies enough time to shift their supply chains back to the United States.

In addition, automakers will also be exempt from certain other tariffs, such as steel and aluminum import duties, to avoid double taxation. However, companies must pay the higher amount of the two. The new rules will be retroactive to April 3.

Ford CEO Jim Farley said before Trump's announcement: "Ford welcomes and thanks President Trump for his decision, which will help alleviate the impact of tariffs on automakers, suppliers, and consumers." He added: "We believe that policies encouraging exports and ensuring cost-competitive supply chains are crucial for driving growth in the United States."

General Motors CEO Mary Barra praised Trump's support for the auto industry and millions of Americans who depend on it. GM announced its first-quarter earnings earlier on the same day and said it would reassess its full-year outlook, as the original forecast did not account for the 25% tariff and now needs to take the new policy into consideration. The company's analyst conference call has been postponed to Thursday morning.

U.S. Commerce Secretary Rutnike told The Wall Street Journal: "This agreement will be a major victory for President Trump's trade policy, rewarding those who already produce in the United States and providing clear direction for manufacturers looking to invest in the U.S. and expand domestic capacity."

Source: https://www.toutiao.com/article/1830777131765763/

Disclaimer: The article represents the views of the author alone.