May 1st, 2025 – President Donald Trump signed an executive order Tuesday modifying some of the automotive tariffs introduced earlier this month, responding to mounting pressure from automakers facing regulatory uncertainty and rising costs.
While the 25% tariff on imported vehicles remains in place, the new order aims to mitigate the “stacking” effect of overlapping levies—such as the separate 25% duties on steel and aluminum—that had compounded the financial burden on the auto industry.
Additional 25% tariffs on imported auto parts, scheduled to begin May 3, will proceed as planned. However, vehicles assembled in the U.S. may now qualify for partial tariff reimbursements for two years. These include offsets equal to 3.75% of the value of U.S.-built vehicles completed before May 1, 2026, and 2.5% for those completed before April 30, 2027.
The administration said these reimbursement rates were calculated by applying a 25% tariff to 15% of a U.S.-assembled vehicle’s value in the first year, and to 10% in the second.
Speaking in Michigan on Tuesday, Trump warned automakers that failure to bring parts manufacturing back to the U.S. would prompt stronger action. He offered no further details beyond referencing the 15% and 10% figures.
The reimbursement program is retroactive to April 3, when the tariffs took effect. Trump described the relief as a temporary measure to support manufacturers during the transition. “If they can’t get parts, we didn’t want to penalize them,” he said.
The decision comes after intense lobbying by automakers and industry groups alarmed by the compounding effect of multiple tariffs. Last week, six major automotive policy organizations—including the Alliance for Automotive Innovation—jointly urged the administration to reconsider the tariffs on parts, warning they could severely disrupt U.S. production and hurt suppliers already under financial strain.
“Relief similar to what was granted for consumer electronics and semiconductors would be a positive development,” the groups wrote in a letter to White House officials.
General Motors CFO Paul Jacobson noted on Tuesday that the financial impact of the tariffs could be “significant.” In response, GM withdrew its 2025 guidance, suspended stock buybacks, and postponed its investor call to Thursday.
Autos Drive America CEO Jennifer Safavian welcomed the move but called for broader policy changes to create a more supportive regulatory environment. “This is some welcome relief, but more must be done,” she said.
Detroit automakers responded positively to the order. Ford CEO Jim Farley called the decision “helpful in mitigating the impact on automakers, suppliers, and consumers.” Stellantis Chair John Elkann said the company appreciates the relief and looks forward to further collaboration with the administration.
GM CEO Mary Barra added that the measure helps level the playing field and supports continued U.S. investment.
Trans-Border will continue to monitor the situation and advise customers accordingly. Should you have any questions or concerns, please contact our Import Compliance team or give us a call at 518-785-6000.
