Trump Strikes Auto Tariff Deal In Major Boost For Carmakers

U.S. Commerce Secretary Howard Lutnick confirmed Monday that a deal has been struck with automakers to ease tariffs—marking a potential policy reversal that could offer major relief to a struggling industry.

The Wall Street Journal earlier reported that President Donald Trump is expected to announce a revamped tariff structure on vehicles that avoids piling new duties atop existing ones. Currently, imported cars face a 25% tariff, along with separate 25% tariffs on steel and aluminum—key materials used in car manufacturing.

“This agreement is a major win for the President’s trade strategy,” Lutnick said in a statement to CNN. “It rewards companies that manufacture in the U.S. and gives a runway for those committed to expanding domestic production.”

Details of the agreement remain under wraps, but a White House official told Reuters the deal will be formally unveiled Tuesday, when Trump visits Michigan—America’s automotive heartland—to commemorate the first 100 days of his second term.

The news comes as welcome relief to automakers, dealers, and car buyers, all bracing for price hikes and supply disruptions. Experts have warned that the 25% tariffs could add thousands of dollars to the cost of building or importing a vehicle and further squeeze inventories. With plans for additional tariffs on auto parts looming as soon as Saturday, industry leaders had been pressing for urgent action.

The auto sector has been lobbying hard for relief, arguing the tariffs would ripple through supply chains, hurt consumer wallets, and disrupt production.

“We’re grateful to President Trump for standing with the U.S. auto industry and the millions of Americans it supports,” said General Motors CEO Mary Barra. “His leadership is leveling the playing field and enabling us to invest even more in the American economy.”

Still, uncertainty remains. GM has withdrawn its earlier 2025 profit guidance and postponed its Q1 earnings call—originally set for Tuesday—to Thursday, citing the need to assess the full impact of the tariff shift.

“Given the evolving nature of the situation, the impact of tariffs could be substantial,” GM CFO Paul Jacobson said. “We’re in ongoing discussions with the administration and hope for more clarity soon.”

Though GM has ramped up production of its popular pickup trucks—Chevrolet Silverado and GMC Sierra—at its Fort Wayne, Indiana plant, the company insists it’s not pulling back from its operations in Mexico or Canada. Government data shows that over half the components in cars built in the U.S. are still imported.

Global markets reacted quickly to the news. In Asia, Toyota shares rose 3.6%, Honda climbed 1%, Nissan gained 2.3%, Hyundai added 1.2%, and Kia jumped more than 2%.

Push for Exemptions

Last week, a coalition of U.S. and international automakers sent a letter to the Trump administration requesting relief from the tariffs—similar to exemptions granted to the semiconductor and electronics sectors.

“Tariffs on auto parts will wreak havoc on the global automotive supply chain,” the letter warned. “They’ll raise prices for consumers, cut into dealership sales, and drive up costs for repairs and servicing.”

Many smaller auto suppliers, already in financial distress, could face production halts, layoffs, or even bankruptcy, the group added.

The upcoming 25% tariff on imported parts—set to take effect this weekend—is expected to deepen the industry’s struggles. However, sources told the Wall Street Journal that these rates may be significantly reduced.

Critically, any changes to auto tariffs are expected to be retroactive, allowing automakers to claim refunds on past tariff payments that would no longer apply.

Still, Trump’s history of abrupt shifts in trade policy has left many in the industry cautious.

The New York Times reported that automakers will be reimbursed for part of their tariff costs—up to 3.75% of a new vehicle’s value in the first year, with the benefit tapering off over two years.

Earlier this month, Trump signaled he was open to granting exemptions to automakers that need time to scale up U.S. production—a nod to the challenges of rapidly reshoring global operations.