President Donald Trump announced a plan to facilitate the burden of new prices of 25% on foreign vehicles and manufacturing parts. Under the proposal, car manufacturers with American factories can claim credits on import taxes depending on the volume of sales and suggested retail prices.
White House officials said the proposal will use a formula linked to the number of cars sold in the United States and the price of each model.
Officials added that relief will take place for two years, giving companies of time to rethink their supply chains without dealing with the total cost of prices. They also confirmed that the parts made in Canada and Mexico under North American free trade rules will remain exempt from the 25%tax.
The announcement comes when President Trump is preparing to organize a rally in Michigan on Tuesday to mark his first 100 days in power. Michigan is a key battlefield state and the heart of the American automotive industry. Michigan also houses Ford, General Motors and Stellantis, and a network of more than 1,000 major suppliers in the sector.
These companies have been in limbo since March, when Trump unveiled 25% of rates on cars and car parts, saying that he wanted to stimulate national production for national security.
Consumers have run to buy vehicles before prices, causing a short -term sales peak. However, this decision also forced manufacturers to rethink production calendars and pressure supply provisions.
When General Motors published his quarterly results to investors on Tuesday, he said that the functions would force him to revise his annual forecasts and withdraw his previous directives. In an unusual step, General Motors also postponed his appeal to profits, which was to discuss the figures.
The 25% price on cars made abroad, which represented almost half of the sales of US vehicles last year, entered into force last month. The parts on the parts were to start on May 3.
American engines have praised the ease of prices
Last week, a coalition of American automotive groups representing companies such as General Motors, Toyota and Volkswagen sent a letter asking the president not to impose the tasks on the documents.
They warned that the levies “would cause an increase in automotive prices for consumers, a drop in sales from dealers and make the maintenance and repair of vehicles both more expensive”.
As part of the adjusted plan, car manufacturers can claim a “compensation” on what they pay in the tariffs of parts of a value of up to 3.75% of the suggested retail price of a vehicle during the first year, falling to 2.5% in the second year.
According to the White House, any car with at least 85% of its parties made in the United States, Canada or Mexico will first avoid the law of 25%. This threshold will reach 90% in the second year. Officials have described the update as recognition that today's automotive supply chains are extending over the world, noting that even vehicles sold as American manufacturing often include parts from abroad.
They also said that car rates would not accumulate above existing steel and aluminum tasks, preventing companies from paying several costs on the same materials.
The car manufacturers welcomed the news of the softened position. “We are grateful to President Trump for his support for the American automotive industry and the millions of Americans who depend on us,” said Mary Barra, managing director of General Motors. “We appreciate productive conversations with the president and his administration and we are impatient to continue working together.”
Ford said that this decision “would help to mitigate the impact of prices on car manufacturers, suppliers and consumers”, adding: “We will continue to work closely with the president's administration support for a healthy and growing automotive industry in America.”
The company called on policies that encouraged exports and guaranteed affordable “essential” affordable supply chains and said that if the important important corresponds to Ford's commitment to American manufacturing, the country would see “a windfall of new assembly factories and suppliers and hundreds of new jobs”.
Stellantis president John Elkann said: “We are looking forward to our continuous collaboration with the American administration to strengthen a competitive American automotive industry and stimulate exports.”
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