US Commerce Secretary Signals Tariff Relief Deal For Automakers In Major Policy Shift

U.S. Commerce Secretary Howard Lutnick signaled Monday that an agreement had been finalized to reduce tariffs on automakers, marking a policy shift that could offer much-needed relief to the struggling auto industry.

"This deal is a major victory for the President's trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing," Lutnick was quoted as saying by CNN.

President Donald Trump is expected to formally announce the decision during a visit to Michigan on Tuesday, where he will mark the first 100 days of his second term. The move comes amid mounting concerns from automakers and consumers alike about the rising cost of vehicles and the ripple effects of tariffs across the supply chain.

According to people familiar with the matter, Trump's updated policy will prevent tariffs on imported cars from being compounded by other duties, such as the existing 25% levies on steel and aluminum.

The administration also plans to ease some tariffs on foreign parts used in U.S. car manufacturing, which had been set to take effect as early as this Saturday.

Currently, nearly all imported vehicles are subject to a 25% tariff, in addition to tariffs on key raw materials like steel and aluminum — both essential to auto production. Experts warn that this combination could drive up the cost of building or importing a car by thousands of dollars, while further straining vehicle supply.

The proposed changes would also include reimbursement for tariffs already paid on materials like steel and aluminum, offering additional financial relief for automakers.

The White House confirmed the plan Monday evening, saying an official announcement would come Tuesday, marking what could be a significant shift in Trump's tariff strategy.

General Motors CEO Mary Barra and Ford CEO Jim Farley welcomed the planned tariff changes. "We believe the president's leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy," he said.

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The auto industry, including automakers, suppliers, and dealers, has voiced growing alarm over the compounded impact of tariffs on vehicles and parts.

Last week, a coalition of U.S. and international carmakers sent a letter to the Trump administration urging similar exemptions to those already granted to industries like semiconductors and consumer electronics, reported Reuters.

The letter, sent to Lutnick, U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent was signed by groups representing major automakers, including GM, Toyota, Volkswagen, and Hyundai.

"Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable," the industry groups urged.

The timing of the announcement is notable, with Trump heading to Michigan — the center of the American auto industry and home to the Detroit Three automakers — where more than 1,000 major auto suppliers are based.

Automakers signaled earlier Monday that they were expecting the announcement ahead of the president's visit.