Trump’s huge gift to car lovers

A massive backdown from US President Donald Trump is set to provide drivers a very unexpected present.

US automakers have finally received a break from the controversial auto tariffs imposed by President Donald Trump.

The White House on Tuesday confirmed that automakers who are now subject to the new 25 per cent tariff on imported vehicles, imposed earlier this month, will be exempt from paying additional duties on raw materials such as steel and aluminium.

The partial rollback follows weeks of lobbying by Detroit’s Big Three and other major players who warned the 25 per cent auto tariffs risked dismantling the North American supply chain.

But while some levies will no longer “stack”, White House officials later clarified that automakers could still face tariffs depending on the country of origin.

The executive order, signed by President Donald Trump on Tuesday, allows automakers to claim credits up to 15 per cent of the value of vehicles assembled in the United States.

These credits can be applied to offset the costs of imported parts.

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While the White House’s adjustment provides some relief, the US auto industry is still dealing with supply chain disruptions. Picture: AFP

The move will also allay a feared significant rise in the cost of vehicles and vehicle maintenance in the US.

Auto parts that comply with the United States-Mexico-Canada agreement (USMCA) rules of origin will remain exempt.

Commerce Secretary Howard Lutnick 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 a runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.”

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Donald Trump’s tariffs are creating widespread confusion. Picture: AFP

While the administration’s adjustments provide some relief, the US auto industry is still grappling with supply chain disruptions.

How the adjustment affects the Australia car market remains to be seen. US-made cars only accounted for around one per cent of sales in Australia last year but it has been a growing segment of the market.

On Tuesday, General Motors withdrew its annual financial forecast, despite posting strong quarterly earnings.

The company also delayed a planned investment call.

Industry response has been cautiously optimistic with Ford issuing a statement saying it “welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers and consumers.”

US made vehicles such as RAM, represent a small but growing part of the Aussie market. Picture: Mark Stewart

Stellantis, parent company of Jeep, Ram and Dodge said it would continue “collaboration with the US administration to strengthen a competitive American auto industry and stimulate exports.”

General Motors chief executive officer Mary Barra said the company was “grateful to President Trump for his support of the U.S. automotive industry and the millions of Americans who depend on us.”

Originally published as Trump’s huge gift to car lovers