President Trump is expected to ease the financial blow of his newly imposed auto tariffs by allowing reimbursements for automakers and limiting overlapping duties on imported materials, according to people familiar with the policy.
The move comes just ahead of Trump’s Tuesday rally outside Detroit, marking his 100th day in office. Under the revised policy, automakers will not face compounded tariffs—such as paying both the 25% duty on imported vehicles and additional levies on inputs like steel and aluminum. The decision will be retroactive, meaning automakers could be reimbursed for tariffs they already paid.
Additionally, the administration plans to modify a 25% tariff on foreign-made auto parts, which takes effect May 3. Automakers will be eligible for reimbursement of those costs up to 3.75% of the value of a U.S.-made vehicle for one year, decreasing to 2.5% in the second year before being phased out entirely.
To qualify, automakers will be required to apply to the federal government for reimbursements. However, it remains unclear which agency will administer the process or where the reimbursement funds will come from.
Commerce Secretary Howard Lutnick called the move a “major victory” for Trump’s trade strategy, saying it rewards companies already manufacturing in the U.S. and gives others time to restore supply chains. “President Trump is building an important partnership with both the domestic automakers and our great American workers,” Lutnick said in a statement from the White House.
Moreover, Ford CEO Jim Farley welcomed the policy shift. This will “help mitigate the impact of tariffs on automakers, suppliers, and consumers,” Farley said in a statement. Farley also emphasized that the company will continue to work closely with the Trump administration to support the president’s vision for a growing American auto industry.
Trump’s original 25% tariff on imported vehicles, implemented earlier this month, had raised concerns about price hikes. Morgan Stanley estimated it could add up to $6,000 to the cost of a new car, a 10% to 12% increase.
The adjustment marks Trump’s latest softening of tariffs following market disruption and industry lobbying. Earlier this month, he paused several tariffs for 90 days and has since moderated his stance on China, after raising tariffs on imports from the country to 145%.
