Trump Spares Automakers From More Pain in Reciprocal Tariffs | Financial Post

Automobiles and parts were largely spared from President Donald Trump’s latest round of tariffs, a win for an industry already reeling from his escalating trade war.

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(Bloomberg) — Automobiles and parts were largely spared from President Donald Trump’s latest round of tariffs, a win for an industry already reeling from his escalating trade war.

Imported vehicles and parts covered by the 25% tariff targeting the industry — which takes effect on April 3 — will be exempt from Trump’s so-called reciprocal tariffs, the White House said on Wednesday. In addition, Canada and Mexico were spared from the latest duties targeting other trading partners, including major auto-exporters such as South Korea, Japan and the European Union.

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The US will keep existing 25% tariffs on Canada and Mexico, and an exemption for goods that comply with the free trade agreement between the countries will remain indefinitely, officials said. Those levies were initially imposed to urge action to curb the flow of fentanyl. The countries would switch to the new tariff regime if those initial levies are lifted, officials said.

Although the latest move largely sidestepped heaping even more pressure on the industry, automakers still face significant potential cost increases and supply chain turmoil from Trump’s new tariff specifically targeting imported vehicles and parts.

“While the sector may feel it just dodged a bullet, we remain concerned that vehicle and parts tariffs are here to stay and will add a substantial cost burden,” Bernstein analyst Daniel Roeska said in a note to clients.

Auto executives for weeks have lobbied the administration to limit the fallout from Trump’s trade war. Ford Motor Co., General Motors Co. and Chrysler parent Stellantis NV most recently have pushed to exclude certain low-cost car components from the planned tariffs.

Industry executives have said that they support Trump’s goal of building more automobiles in the US and expanding the country’s manufacturing base. But moving automobile assembly plants will likely take years, and may never happen for cash-strapped parts suppliers.

Automaker shares fell as Trump announced the much-anticipated measures before paring losses. GM was down 1.6% in after-hours trading while Tesla Inc. tumbled 6.2% and Stellantis slipped 1.9%. Ford shares were unchanged.

Trump’s tariff plans have already shaken up the industry even before the sector-specific levy takes effect. Car buyers rushed to US showrooms to lock in deals before potential price hikes from the levies. That drove March sales to an annual rate of about 17.8 million vehicles, the most since April 2021, according to JPMorgan analyst Ryan Brinkman.

Mercedes-Benz Group AG is considering whether to pull its least expensive cars such as the GLA small SUV from the US market, because the tariffs would make those vehicles economically unfeasible, Bloomberg has reported.

—With assistance from Josh Wingrove.

(Updates with analyst comment, postmarket share moves from the fifth paragraph.)

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