Trump poised to ease impact of car tariffs with reimbursement plan for US automakers

President Trump is preparing to soften the blow of his new car tariffs by introducing measures that would prevent stacking duties and offer partial reimbursements to US carmakers for imported parts.

The car tariffs, which came into effect on April 3 and are set to extend to car parts on May 3, had sparked concern across the automotive industry. However, Trump is expected to announce a reprieve before a visit to Michigan—home to the Detroit Three carmakers and more than 1,000 major suppliers.

Howard Lutnick, the commerce secretary, said: “President Trump is building an important partnership with both the domestic automakers and our great American workers. 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.”

Under the expected changes, carmakers would be allowed to receive partial reimbursements based on the value of their US car production. The policy would also be applied retroactively, meaning manufacturers could recover some of the charges already incurred since the tariffs were introduced. Additionally, car imports will not be hit with multiple levies, such as overlapping tariffs on steel and aluminium.

Mary Barra, chief executive of General Motors, welcomed the anticipated relief: “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 US economy,” she said.

The move comes at a critical time for UK car manufacturers. The United States is the second-largest export market for British-made vehicles, accounting for 16.9 per cent of exports in 2024—around 100,000 vehicles—worth £7.6 billion, according to the Society of Motor Manufacturers and Traders (SMMT).

A recent study by the US International Trade Commission warned that a 25 per cent tariff could slash car imports by nearly 75 per cent, posing a serious threat to the UK’s automotive sector. Some UK carmakers are already feeling the strain: Jaguar Land Rover paused shipments of British-built vehicles to the US for a month as it works to manage the fallout from the new duties.

While Trump’s expected adjustments will ease immediate pressure on American manufacturers, uncertainty remains for international exporters, who continue to watch closely for further developments.

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Trump poised to ease impact of car tariffs with reimbursement plan for US automakers