Key Takeaways
- President Donald Trump has reduced vehicle tariffs in his latest trade policy change.
- Foreign cars will still be subject to a 25% auto tariff, but no additional tariffs, such as a 25% tariff on steel and aluminum imports, will be charged.
- American-built cars will also get a tax break on parts from abroad, which will phase out in three years.
In his latest backtracking on tariff policy, President Donald Trump has signed an executive order reducing import taxes for cars, as well as on parts and materials automakers bring in from abroad.
The White House said Tuesday that vehicles will no longer be subject to additional tariffs on top of the 25% levy on imported cars and trucks. This will prevent tariffs from stacking up on cars made in countries that are subject to additional tariffs. Trump reportedly signed the executive order Tuesday afternoon.
In addition, domestic automakers will also get a tax break on foreign-made parts that go into their vehicles, starting at up to 3.75% of the car’s value for one year, 2.5% the next year, and phasing out completely the third year.
“We just wanted to help them during this little transition, short-term,” Trump said Tuesday afternoon.
Taken together, the changes soften though not eliminate the impact of the taxes, which are expected to drive up prices for new cars by thousands of dollars , and drive up costs for used cars, repairs, and insurance.
The move is the latest about-face in Trump’s on-again, off-again trade wars. Since February, Trump has repeatedly announced various tariffs against trading partners only to suspend or water them down after they’ve gone into effect.
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