Countdown to parts tariffs Trump considers temporary exemption from automobile tariffs

The Zhitong Finance App learned that US President Donald Trump said on Monday that he is exploring temporary exemptions from tariffs on imported cars and parts so that car companies have more time to set up factories in the US.

“I'm considering some measures to help car companies,” Trump said in the Oval Office on Monday. They manufacture parts in Canada, Mexico, and elsewhere. They need a little time because they plan to move production of these components here. ”

This statement may be a relief for automakers affected by import tariffs on cars and light trucks, but it will also bring more uncertainty to Trump's tariff plan. After Trump delivered his speech, the stock prices of General Motors (GM.US), Ford Motor Company (F.US), and Stellantis NV (STLA.US) all hit daily trading highs, reversing earlier declines.

Imposing tariffs on imported cars could raise the prices faced by American consumers and seriously disrupt the deeply integrated automobile supply chain between the US, Canada, and Mexico. Trump believes these tariffs are necessary to revive the US manufacturing industry.

Trump is imposing a 25% tariff on the entire vehicle, and the tariffs on parts will take effect on May 3 at the latest.

For weeks, Detroit's top three automakers have been lobbying the Trump administration to exclude certain low-cost auto parts from planned tariffs. According to people familiar with the matter, Ford, GM, and Stellantis have admitted that they are willing to pay tariffs on the entire vehicle and large parts such as engines and transmissions.

Company representatives have indicated to the Trump administration that the full imposition of tariffs on parts would drive up costs and trigger profit warnings and layoffs, which would run counter to Trump's goal of rebuilding the US automobile manufacturing industry. Automakers are expected to bear most of the tariff burden, at least initially because many component manufacturers already have low profit margins.

According to a report released by research firm Anderson Economic Group this month, tariffs could increase the cost of some imported luxury cars by as much as 20,000 US dollars. Even in the low-end market, smaller cars and crossovers with higher US components may add an additional $2,500 to $4,500 in costs.

The report estimates that American consumers will lose $30 billion in the first year of implementation of the new tariffs. This will have a significant impact on consumers' purchasing power, as consumers are currently facing an average sales price of a new car close to 50,000 US dollars.

Tariff policies are capricious

Trump also said on Monday that he anticipates imposing tariffs on imported drugs “in the near future.”

Trump has frequently changed his tariff policy, sending confusing signals to markets, businesses, and trading partners.

Trump said on Monday that consumer electronics products will be excluded from the 125% Chinese tariff and the 10% global benchmark tariff, which is beneficial to US tech giant Apple (AAPL.US). Trump also praised the investment of artificial intelligence chip maker Nvidia (NVDA.US) in the US.

“I'm a very flexible person, I won't change my mind, but I'm flexible,” Trump said.

“I recently helped Tim Cook and the entire company,” Trump added, referring to Apple's CEO. “I don't want to hurt anyone. But the end result is that we will achieve great things for our country.”

However, Trump said over the weekend that tariff relief on tech products would be short-lived, and he and his aides said these imported products would eventually be covered by industry-specific tariffs.