President Donald Trump’s administration is set to ease the impact of automotive tariffs on U.S. car makers, responding to mounting pressure from industry leaders and unions. The move, announced ahead of Trump’s visit to Michigan-a state central to the American auto sector-will specifically reduce duties on foreign parts used in vehicles assembled domestically. This policy shift aims to prevent overlapping tariffs, such as those on steel and aluminum, from compounding costs for manufacturers, while still maintaining tariffs on fully imported vehicles.

Commerce Secretary Howard Lutnick described the agreement as a major victory for the President’s trade strategy, emphasizing that it rewards companies committed to domestic production and investment. Under the new guidelines, automakers will be eligible for partial reimbursement of tariffs already paid on imported parts, with the reimbursement reaching up to 3.75% of a vehicle’s value in the first year and phasing out over two years. This approach is designed to give manufacturers time to adjust supply chains and relocate more production to the United States, while also supporting American workers.

The automotive industry had warned that the previously planned 25% tariff on imported parts, set to take effect by May 3, would disrupt global supply chains, increase vehicle prices for consumers, and threaten jobs across the sector. Industry groups representing major automakers like GM, Ford, and Toyota urged the administration to reconsider, highlighting the risk of reduced sales, higher repair costs, and potential layoffs if the tariffs were fully enforced. The revised policy is seen as a direct response to these concerns, aiming to balance protectionist trade goals with the realities of a globalized industry.

General Motors CEO Mary Barra welcomed the relief, stating that it enables further investment in the U.S. economy and helps level the playing field for domestic manufacturers. Ford and other automakers echoed this sentiment, noting that the changes will reduce the negative impact of tariffs on their operations, suppliers, and customers. The White House is expected to formalize the new tariff structure during Trump’s Michigan visit, marking a significant shift in the administration’s approach to trade enforcement and industrial policy.