Washington: US President Donald Trump, on Tuesday, will soften his automotive prices thanks to credits to mix executive decree with relief of other samples on parts and materials, after the car manufacturers supported their file with the administration.
The changes made to the price of vehicles of 25% of Trump will provide automobile companies with credits for up to 15% of the value of vehicles assembled nationally. These could be applied to the value of imported documents, which makes it possible to bring back the supply chains at home, said a senior administration official.
A trade manager said it would work to allow car manufacturers to import duties with a value of around 3.75% of the value of the cars produced in the country they sell in the first year and 2.5% in the second year. The profit is going in the third year, putting pressure on companies to move the production of parts in the United States.
In addition, cars and parts subject to these prices would no longer be subject to other Trump prices, including 25% of tasks on Canadian and Mexican products, 25% of steel and aluminum samples, as well as 10% of tasks applied to most other countries.
In the case of metal prices, car manufacturers would pay the vehicle rate or steel and aluminum prices, according to the highest, said the manager.
Trump was to go to the US Auto Hub of Michigan on Tuesday to mark his first 100 days in power, during which the Republican President has turned the world economic order. The state is home to the three Detroit car manufacturers and more than 1,000 large automotive suppliers.
The softening of the impact of car withdrawals is the last decision of its administration to show flexibility on the tariffs which have sown disorders on the financial markets, created uncertainty for businesses and aroused fears of net economic slowdown.
The first quarterly report on the American gross domestic product covering Trump’s mandate is expected to be released on Wednesday. He should reflect a large trail of the effect of his prices, mainly from a record increase in imports as business and consumers responsible for purchases of foreign goods to try to beat the new samples. The economy was to be extended to an annualized rate of 0.3% from January to March, according to a reuters survey of economists, against 2.4% in the last three months of 2024.
Continuous volatility
General Motors GM.N, CEO Mary Barra and CEO of Ford FN, Jim Farley, praised the changes planned before the signing of the new order by Trump.
“We think that the leadership of the president helps to level the rules of the game for companies like GM and allowing us to invest even more in the American economy,” said Barra.
Farley said changes “will help reduce the impact of prices on car manufacturers, suppliers and consumers”.
But uncertainty was unleashed in the automotive sector by Trump’s prices remained in the midst on Tuesday when GM withdrew its annual forecasts when it declared solid sales and quarterly profits. In an unusual decision, the automaker has also chosen to delay a conference call for analysts until the week later during the week, after the details of the pricing changes were known.
“The car manufacturers would host any exemption, but volatility continues with the uncertainty of trade policy. As we have seen, prices can be offered and revised in the short term. This does not change the broader commercial strategy issues that are confronted by car manufacturers,” said Lenny Larocca, American leader in the American industry in KPMG.
Last week, a coalition of American automotive industry groups urged Trump not to impose 25% prices on imported automotive parts, warning that they would reduce vehicle sales and increase prices.
Earlier, Trump said he was planning to impose 25% rates on automotive parts at the latest on May 3.
“Automobile parts will scramble the global automotive supply chain and trigger a domino effect that will cause higher automobile prices for consumers, lower sales among dealers and make the maintenance and repair of vehicles that are both more expensive and less predictable,” said industry groups in the letter.
The letter of the groups representing GM, Toyota Motor, Volkswagen Vowg.de, Hyundai 005380.K and others, was sent to the American commercial representative Jamieson Greer, to the secretary of the Treasury Scott Bessent and the commercial Lutnick.
“Most car suppliers are not capitalized for a steep rupture induced by prices. Many are already in distress and will face production stops, layoffs and bankruptcy,” added the letter, noting “it is only necessary to fail a supplier to lead to the closure of the production line of a automaker”.