From Yahoo Finance: 2025-04-29 11:32:00

The U.S. will reimburse domestic car manufacturers for a portion of costs related to 25% tariffs on auto parts starting May 3, per an amended executive order signed by President Trump. Automakers can offset up to 3.75% of tariff costs for one year, dropping to 2.5% the following year.

The Commerce Department has 30 days to establish a process for automakers to provide necessary documentation for cost offset. This includes domestic production plans, projected tariff costs, and importers of record. The new order does not impact previous 25% auto tariffs or those on steel and aluminum imports.

Cars and auto parts compliant with the USMCA are not subject to the 25% tariffs. A process to tax only non-U.S. content of those parts will be established by May 3. Canada has allowed limited duty-free imports of U.S.-assembled vehicles. Automakers have urged leniency from recent tariffs, citing trade policy uncertainty.

A report from the Center for Automotive Research predicts tariffs on the auto industry will increase costs for all domestic automakers by $107.7 billion in 2025. General Motors, Ford Motor Co., and Stellantis alone are expected to take a $41.9 billion hit. Projections could be conservative due to unknown impacts on cross-border trade.

Read more: Trump softens tariffs on auto parts for US-assembled cars