According to the new White House profile, U.S. automakers will get some relief from tariffs by U.S. President Donald Trump. Manufacturers have to pay a 25% tariff on any parts used in any U.S. assembled vehicles before obtaining a new executive order. Now, until April 30, 2026, and until April 30, 2027, they will be able to deduct up to 3.75% of the price of new U.S. cars. In addition, the tariffs on steel or auto parts (not as before), the tariffs on steel or auto parts are based on their higher fees.
The new regulations are reportedly at the request of manufacturers, who say they need time to transfer parts production to the United States. “We just want to help them during the short-term transition. We don’t want to punish them,” Trump told reporters.
The figure of 3.75% is achieved by multiplying 15% of the imported parts that make up the sales price of the vehicle by the current 25% import tax. So if a $40,000 car has $6,000 or 15% of imported parts, the manufacturer will effectively not pay tariffs, but any higher percentage of foreign parts will result in some tariffs being paid. The White House said kickbacks won’t cost taxpayers anything due to the tariffs collected.
The White House pointed out that the trade deficit of U.S. auto parts is $93.5 billion in 2024. A large portion of this comes from Canada, with a large number of American vehicles also being built in the country. But the reason why U.S. automakers make cars and auto parts in Canada is that it is cheap, mainly because of the high cost of health care for U.S. employees. So even if automakers produce more parts in the United States, car prices may still rise.
According to the Associated Press, the average price of new cars in the United States was $47,462 last month. A prominent analyst predicts that the initial 25% tariff could increase the cost of the vehicle by $4,711, while also increasing ownership and maintenance costs.
