Tariff Tactics: Trump's Strategy to Shield Automakers

President Donald Trump plans to soften auto tariffs through an executive order allowing credits against imported parts. This move aims to ease the industry's transition and shield it from other levies while pushing production back home, amid global economic volatility.

President Donald Trump announced plans to mitigate the impact of hefty auto tariffs through an executive order that introduces a credit system, providing relief for automakers importing parts. The new strategy aims to alleviate domestic companies' burden by offering credits of up to 15% of domestically assembled vehicles' value.

This initiative allows automakers to import parts duty-free, worth approximately 3.75% of the sticker price of domestically produced vehicles, decreasing to 2.5% in the second year, phasing out by the third year. This change aims to motivate automakers to shift production to the U.S., reducing dependency on foreign supply chains.

The move comes as Trump visits the automotive heartland of Michigan to commemorate 100 days in office, reinforcing his administration's willingness to recalibrate tariff policies to balance economic interests. Automaker CEOs have welcomed the decision as it offers vital relief amid ongoing trade policy volatility.

(With inputs from agencies.)