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The US Secretary of Commerce Howard Lutnick seemed to confirm on Monday the reports that an agreement was concluded with car manufacturers to mitigate prices, in another potential policy reversal which could grant a major suspended for a besieged industry.
The Wall Street Journal reported earlier that President Donald Trump should announce a new tariff structure for cars that avoid stacking them in addition to other rates already in place. Currently, there is a 25% price on almost all imported cars as well as 25% prices on steel and aluminum, two metals strongly used in cars.
“This agreement is a major victory for the president’s trade policy by rewarding the companies that manufacture at the national level, while providing a track to manufacturers who have expressed their commitment to invest in America and extend their national manufacturing,” Larick said in a statement in CNN.
The declaration has provided no details on the parameters of the agreement.
A White House official told Reuters that the agreement would be officially made on Tuesday when Trump should go to Michigan, in the heart of the American automotive industry, to mark the first 100 days of his second mandate in the White House.
Car manufacturers, dealers and car buyers clashed for the impact of prices, which could upset the car shopping market in the coming weeks.
Experts claim that the 25% rate could increase the cost of building or importing cars per thousand dollars each, as well as reducing the supply of vehicles available for sale. And with the administration which also plans to put prices on automotive parts on Saturday, this could increase the price of even higher cars, as all vehicles built in the United States contain imported parts.
The automotive industry, including car manufacturers and dealers, has put pressure on lightening of samples, saying that import taxes will have a large impact on Americans’ finances and hinder their own supply chains.
“We are grateful to President Trump for his support for the American automotive industry and the millions of Americans who depend on us,” the CEO of General Motors said Mary Barra on Monday.
“We believe that the leadership of the president helps to level the rules of the game for companies like GM and allowing us to invest even more in the American economy. We appreciate productive conversations with the president and his administration and we look forward to continuing to work together, ”she said.
Actions in car manufacturers listed in Asia jumped Tuesday in response to the news. Toyota, the best car manufacturer in the world, was spent the last time 3.6%. Its small Japanese honda rivals won 1% and Nissan increased by 2.3%. In South Korea, Hyundai was 1.2% higher and its affiliate Kia gained more than 2%.
Last week, a coalition of American and international car manufacturers wrote a letter to the Trump administration requesting relief of prices, similar to the exemptions already granted to semiconductors and consumer electronics.
“The prices on automotive parts will blur the global automotive supply chain and will trigger a domino effect which will cause higher automobile prices for consumers, lower sales among dealers and make the maintenance and repair of vehicles that are both more expensive and less predictable,” he said.
“Most car suppliers are not capitalized for a sudden interruption induced by prices. Many are already in distress and will face production stops, layoffs and bankruptcy,” he added.
The automotive industry has been shaken in recent weeks with the slew of new prices. Pain should deepen this weekend with an additional 25% rate on most imported automotive parts. Quoting people familiar with the issue, the WSJ indicated that these rates could be significantly lower.
Together, any change in automotive rate would be retroactive, allowing car manufacturers to be reimbursed for the previous paid prices which are no longer in force, according to the WSJ.
However, Trump has reversed prices on pricing policies several times, which means that all the new changes it brings could easily be modified.
The New York Times reported separately that car manufacturers will be reimbursed for part of the cost of prices on imported components. The reimbursement will amount to 3.75% of the value of a new car during the first year, but will be deleted over two years, has cited a White House spokesperson as.
Earlier in April, Trump told journalists that he was open to exempt certain tariff car manufacturers in order to give them more time to build their manufacturing facilities in the United States.
This story has been updated with additional reports and context.
