Tariff relief for U.S. final vehicle assembly could be right around the corner
Senator Bernie Moreno and unnamed auto officials have said that President Trump is considering substantial tariff relief for U.S. auto manufacturers. Moreno, who formerly owned over a dozen car dealerships, said: “The signal to the car companies around the world is, look, [when] you have final assembly in the US, we’re going to reward you,” Reuters reports. The Ohio Senator added: “For Ford, for Toyota, for Honda, for Tesla, for GM (General Motors) — those are almost in order the top five domestic content vehicle producers — they’ll be immune to tariffs.”
In June, the Commerce Department discussed implementing an import adjustment offset equal to 3.75% of the suggested retail price for eligible U.S.-assembled vehicles through April 2026, followed by a second year at 2.5% in response to address tariffs on imported auto parts. However, Trump is considering keeping the rate at 3.75% for five years, with U.S. engine production included. While there’s no official timeline for a decision, Moreno believes the President’s choice will arrive soon. A White House spokesperson said that the President and his administration: “Are committed to a nuanced and multi-faceted approach to securing domestic auto and auto parts production. Until any official action is signed by the President, however, any discussion about administration policymaking is speculative,” according to Reuters.
How Trump’s tariff system has impacted Detroit’s Big Three in 2025
The update on potential tariff relief arrives as automakers like GM, Ford, and Stellantis spend billions on the levy system. GM predicts tariffs will cost the company between $4 and $5 billion this year, while Ford and Stellantis expect to pay $2 billion and $1.7 billion, respectively. Ford initially anticipated $3 billion in expenses, but is now considering mitigating $1 billion of that cost. Additionally, GM predicts it can avoid 30% of its $4 to $5 billion 2025 tariff bill. In September, consultant Warren Browne forecasted that U.S. vehicle production would decrease to 10.45 million units in 2025 from 10.8 million in 2024, Car Dealership Guy reports. Detroit automaker shares rose last week in response to President Trump’s consideration, with GM, Ford, and Stellantis moving from trading levels or down to closing up between 1% to 4%, according to CNBC. Honda and Toyota, both of which run substantial U.S. operations, also saw bumps. However, Tesla stock experienced little to no change after the report.
Stellantis
In May, the Trump administration imposed 25% tariffs on over $460 billion of annual vehicle and parts imports before reducing the rate for trade partners, including, but not limited to, Japan and the United Kingdom. Soon after, in August, the Commerce Department raised tariffs on steel and aluminum products valued at $240 billion a year, impacting auto parts like exhaust systems, electrical steel for electric vehicles, and other related components.
Final thoughts
If Trump instates an expanded tax rebate program for U.S.-assembled vehicles, the tariff system could shift from a significant problem for companies like GM and Ford into an incentive for domestic manufacturing and parts supply chains. Currently, the tariff system is complex for automakers to navigate, and additional tariffs on key materials, such as steel, can compound costs.
