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President Donald Trump signed executive orders Tuesday that will roll back a portion of his own 25% tariffs on imported autos and auto parts, a significant shift in trade policy that aims to relieve pressure on U.S. automakers while encouraging them to ramp up domestic manufacturing.
Speaking to reporters, Trump said the changes are intended to be “a bridge” for auto manufacturers working to move their supply chains and production facilities back to the United States.
“We just wanted to help them during this little transition, short term,” Trump said. “We didn’t want to penalize them.”
Under the new policy, automakers who complete their vehicle assembly within the U.S. will receive a 15% rebate on tariffs this year, dropping to 10% next year. The rebate is open to both U.S. and foreign carmakers with domestic manufacturing plants, a senior Commerce Department official said.
Treasury Secretary Scott Bessent emphasized the administration’s goal of job creation during a White House press briefing.
“President Trump has had meetings with both domestic and foreign auto producers, and he’s committed to bringing back auto production to the U.S.,” Bessent said. “So we want to give the automakers a path to do that, quickly, efficiently and create as many jobs as possible.”
Industry leaders praised the move. Stellantis Chairman John Elkann called it a “relief measure” and signaled openness to further collaboration with the administration. GM CEO Mary Barra thanked Trump for “leveling the playing field” and expressed optimism about new investments in U.S. operations. Ford CEO Jim Farley echoed the sentiment and challenged competitors to match Ford’s high domestic production ratio.
“If every company that sells vehicles in the U.S. matched Ford’s American manufacturing ratio, 4 million more vehicles would be assembled in America each year,” Farley said.
Still, analysts warned that the tariffs, even partially rolled back, continue to disrupt the industry. Sam Fiorani of AutoForecast Solutions noted that shifting automotive production is a slow, capital-intensive process.
“Making a production change for vehicle manufacturing takes minimum, months, and usually years, along with hundreds of millions if not billions of dollars,” Fiorani said. “It’s not something they take lightly.”
The auto tariffs have been one of the more contentious trade moves of Trump’s presidency. According to economist Arthur Laffer, the tariffs could have added $4,711 to the cost of a new vehicle. With the average new car price sitting at $47,462 last month, according to Kelley Blue Book, the stakes are high for both manufacturers and inflation-sensitive consumers.
The timing of the announcement is also notable: Trump visited Michigan this week, marking his 100th day back in office in a state central to the U.S. auto industry and his reelection strategy.
While the White House hopes the tariff relief will spur factory jobs and cool criticism from automakers, economists remain skeptical of the broader impact. Many argue that tariffs — even with targeted exemptions — increase consumer prices, strain supply chains, and risk slowing the economy.
