Over the past 24 hours, the auto industry has experienced some of the most extreme whiplash in the saga of the Trump administration’s tariffs, ending on Wednesday night with two contradicting policy proposals coming out of the White House: China may be granted exemptions on auto part tariffs, but Canada’s car tariffs might increase.
Last night, the Wall Street Journal reported that Trump was considering slashing his 145 percent tariffs on China, lowering some of them potentially to 50 percent – a report that may have assuaged rattled investors. It seemed especially credible given Trump himself hinted at decreases during a press event earlier that day, saying: “145% is too high. It will come down substantially.” Yet Treasury Secretary Scott Bessent denied the WSJ report the next morning, saying the U.S. would not lower tariffs unilaterally. “This is the equivalent of an embargo, and a break between the two countries in trade does not suit anyone’s interests,” he told reporters.
Within hours, however, the Financial Times reported that Trump was indeed planning to eliminate his recently-imposed tariffs on steel, aluminum, and car parts imported from China, and the White House confirmed to CNBC shortly thereafter that some unilateral exemptions were indeed under consideration. While not a complete reversal — a 25 percent tariff on foreign-made cars and a 25 percent tariff on all imported car parts would still be intact — it would have offered some relief to carmakers, who faced the possibility of absorbing the cost of multiple tariffs stacked on top of each other.
Alas, more confusion ensued. Shortly after the FT report was published, and automotive stocks started trending upwards from the news, Trump told reporters in the Oval Office that Canada — not China — might see auto tariffs further increase. “They took a large percentage of the carmaking, and I want to bring it back to this country,” he said. “I really don’t want cars from Canada. So when I put tariffs on Canada — they’re paying 25 percent, but that could go up in terms of cars — when we put tariffs on, all we’re doing is saying, ‘We don’t want your cars, in all due respect, we want really to make our own cars,’ which is what we’re doing in record numbers.”
The chaotic jumble on auto tariffs is the latest incidence of the Trump administration vacillating on who they are tariffing, what they are tariffing, and how much those tariffs are. But even if new proposed exemptions are “destacked” from the current tariffs, as officials characterized it to the Financial Times, the tariffs in their existing form threaten to devastate the American auto industry. In a letter sent to the administration on Tuesday, a coalition of powerful U.S. auto industry players cited a Center for Automotive Research report which estimated that a 25 percent auto tariff would increase costs to the industry by up to $107 billion.
“Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable,” the coalition wrote.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
