Trump to ease impact of tariffs for auto industry

The Mainichi

29-04-2025

WASHINGTON (Kyodo) -- U.S. President Donald Trump said Tuesday he will ease the impact of his new 25 percent tariffs on the auto industry and help manufacturers relocate supply chains for car parts used in the United States.
The plan, another reversal from Trump's extensive additional tariffs as initially planned, will allow all American and foreign automakers producing vehicles in the United States to claim some reimbursements.
It comes after automakers argued that their supply chains are so complex that it will take time to start procuring domestically all parts necessary to manufacture vehicles in the United States.
The reimbursements will include an amount up to 3.75 percent of the value of each U.S.-made vehicle in the first year and 2.5 percent in the second year, with the offset arrangement stopping there, according to White House and Commerce Department officials.
The officials said that vehicles produced in the United States with at least 85 percent domestic content will be exempt from the tariffs.
Under the relief, the officials also said, automakers will only pay one tariff -- the highest rate that applies to their goods -- without being hit by any of the Trump administration's other new duties, such as a 25 percent tariff on imported steel and aluminum.
Trump is expected to talk about the relief in a speech in Michigan, home to the American auto industry, to mark the 100th day of his nonconsecutive second term.
In early April, an additional 25 percent tariff on all automobiles made outside the United States took effect, which raised the tax rate on imported passenger vehicles to 27.5 percent, dealing a blow to Japanese, German, South Korean and other foreign carmakers as well as their American rivals.
The relief comes four days before a 25 percent tariff covering engines, transmissions and other key auto parts was due to go into effect.
Although the auto tariffs will remain in place, major automakers including Ford Co. and General Motors Co. welcomed the measures to cushion the impacts.
In a related development, Treasury Secretary Scott Bessent suggested Tuesday that the United States is poised to reach a tariff deal with India in the not-so-distant future, marking the first such agreement since Trump returned to office in January.
Bessent said major U.S. trading partners and allies in Asia, including Japan and South Korea, have been the "most forthcoming" in terms of aiming for deals with the Trump administration since its imposition of broad-based tariffs on imported goods.
On India, Bessent said a deal is "very close" and the country is easier to negotiate with than many others because its high tariffs are the main point at issue.
Negotiations with some other countries involve nontariff trade barriers that can be "much more insidious and also harder to detect," he said during a press briefing with White House spokeswoman Karoline Leavitt.
Bessent said the United States has 18 important trading relationships and the Trump administration will hold talks with at least 17 such partners over the next few weeks.
Japan's chief negotiator in its tariff talks with the United States, Ryosei Akazawa, is set to arrive in Washington on Wednesday. He is expected to hold talks with Bessent, with the auto and agricultural sectors likely to top the agenda.