Trump eases auto levies burden as Lutnick touts one done deal
WASHINGTON/DETROIT—US President Donald Trump signed a pair of orders to soften the blow of his auto tariffs on Tuesday with a mix of credits and relief from other levies on materials.
Meanwhile, his trade team touted its first deal with a foreign trading partner. These are developments that eased investor worries about Trump’s erratic trade policies.
The change comes the day Trump arrived in Michigan, cradle of the US auto industry and just days before a fresh set of 25-percent import taxes was 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 percent 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.
‘Reshoring’ factories
Auto industry leaders had lobbied the administration furiously during the weeks since Trump first unveiled his 25-percent 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. “We just wanted to help them … if they can’t get parts, we didn’t want to penalize them.”
The White House noted the move does not soften the 25-percent tariffs imposed last month on the 8 million vehicles the United States imports annually.
Autos Drive America, a group representing Toyota Motor, Volkswagen, Hyundai and nine other foreign automakers, said Trump’s order provided some relief “but more must be done in order to turbocharge the US auto industry.”
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.
Pending approvals
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 percent higher for a sixth day of gains, its longest streak of gains since November.
Trump and his team aim to strike 90 trade deals during a 90-day pause on his reciprocal tariffs announced earlier in April.
His administration has repeatedly said it was negotiating bilateral trade deals with dozens of countries.
A chief Trump goal is to bring down a massive US goods trade deficit, which shot to a record in March on a surge of imports aimed at front-running the levies.
Trump’s aggressive trade policies have cascaded through the global economy since his return to the White House in January, and the 90-day pause was announced after financial markets went into a tailspin over fears of recession and inflation, among other factors.
