Trump signs order to ease car tariffs burden
David Lawder, Andrea Shalal and Kalea Hall |
US President Donald Trump has signed an order to soften the blow of his auto tariffs with a mix of credits and relief from other levies on materials.
His trade team has also touted its first deal with a foreign trading partner, with the developments easing investor worries about Trump’s erratic trade policies.
The change comes as Trump heads to Michigan, cradle of the US auto industry, and just days before a fresh set of 25 per cent import taxes is set to kick in on automotive components.
The trip, on the eve of his 100th day in office, comes as Americans take an increasingly dim view of Trump’s economic stewardship, with indications his tariffs will weigh on growth and could drive up inflation and unemployment.
In his latest partial reversal of tariff policies, the Republican president agreed to provide carmakers with credits for up to 15 per cent of the value of vehicles assembled domestically. These could be applied against the value of imported parts, allowing time to bring supply chains back home.
Auto industry leaders had lobbied the administration furiously during the weeks since Trump first unveiled his 25 per cent tariffs on imported vehicles and auto parts.
The levies, aimed at forcing automakers to reshore manufacturing domestically, had threatened to scramble a North American automotive production network integrated across the US, Canada and Mexico.
It offers the industry a “little relief” as companies invest in more US production, Trump said as he left Washington for Michigan on Tuesday, US time.
“We just wanted to help them … if they can’t get parts, we didn’t want to penalise them.”
The uncertainty unleashed across the auto sector by Trump’s tariffs remained on full display Tuesday when GM pulled its annual forecast even as it reported strong quarterly sales and profit.
In an unusual move, the carmaker also opted to delay a scheduled conference call with analysts until later in the week, after the details of tariff changes were known.
Meanwhile, US Commerce Secretary Howard Lutnick told CNBC he had reached one deal with a foreign power that should permanently ease the “reciprocal” tariffs Trump plans to impose. Lutnick declined to identify the country, saying the deal was pending local approvals.
“I have a deal done … but I need to wait for their prime minister and their parliament to give its approval,” Lutnick said.
Lutnick’s comments helped further lift stock prices that had been battered by Trump’s moves to reshape global trade and force goods makers to shift production to the US.
The benchmark S&P 500 Index closed 0.6 per cent higher for a sixth day of gains, its longest streak of gains since November.
Softening the impact of auto levies is the Trump administration’s latest move to show flexibility on tariffs which have sown turmoil in financial markets, created uncertainty for businesses and sparked fears of a sharp economic slowdown.
A Reuters/Ipsos poll published Tuesday showed just 36 per cent of respondents approve of his economic stewardship, the lowest level in his current term or in his 2017-2021 presidency.
Reuters
