Trump to reduce impact of car tariffs, commerce secretary says

US President Donald Trump's administration will move to reduce the impact of his automotive tariffs on Tuesday by alleviating some duties imposed on foreign parts in domestically manufactured cars and keeping tariffs on cars made abroad from piling on top of other ones, officials said.

"President Trump is building an important partnership with domestic carmakers and our great American workers," commerce secretary Howard Lutnick said in a statement provided by the White House.

"The deal is a major victory for the president's trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.”

The Wall Street Journal, which first reported the development, said the move meant car companies paying tariffs would not be charged other levies, such as those on steel and aluminum, and reimbursements would be given for such tariffs that had been paid.

A White House official confirmed the report and indicated the move would be made official on Tuesday.

Trump is traveling to Michigan on Tuesday to commemorate his first 100 days in office, a period the Republican president has used to upend the global economic order.

The move to soften the effects of car levies is the latest by his administration to show some flexibility on tariffs, which have sown turmoil in financial markets, created uncertainty for businesses and sparked fears of a sharp economic slowdown.

Carmakers said earlier on Monday they were expecting Trump to issue relief from the car tariffs ahead of his trip to Michigan, which is home to the Detroit Three carmakers and more than 1,000 major car suppliers.

General Motors CEO Mary Barra and Ford CEO Jim Farley praised the planned changes.

"We believe the president’s leadership is helping level the playing field for companies such as GM and allowing us to invest even more in the US economy," Barra said.

Farley said the changes "will help mitigate the impact of tariffs on carmakers, suppliers and consumers".

Last week a coalition of US car industry groups urged Trump not to impose 25% tariffs on imported car parts, warning they would cut vehicle sales and raise prices.

Trump had said earlier he planned to impose tariffs of 25% on car parts from no later than May 3.

"Tariffs on car parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher car prices for consumers, lower sales at dealerships and  make servicing and repairing vehicles more expensive and less predictable," the industry groups said in the letter.

The letter from the groups representing GM, Toyota Motor, Volkswagen, Hyundai and others was sent to US trade representative Jamieson Greer, treasury secretary Scott Bessent and commerce's Lutnick.

"Most auto suppliers are not capitalised for an abrupt tariff induced disruption. Many are  in distress and will face production stoppages, layoffs and bankruptcy," the letter said, noting "it only takes the failure of one supplier to lead to a shutdown of an carmaker's production line".