Trump to Announce Tariff Relief Measures Before Detroit Rally
Commemorating 100 Days in Office on April 29
As President Donald Trump considers easing tariffs on imported automobiles, both the finished vehicle and auto parts industries are breathing a sigh of relief.
However, this easing measure by President Trump is seen as only buying time, and there remains lingering anxiety that the United States could reintroduce tariffs at any time to ultimately strengthen domestic supply chains.
According to Reuters and the Wall Street Journal (WSJ) on April 29, President Trump plans to adjust the 25% tariff imposed on foreign-made finished vehicles to prevent overlapping tariffs with other items such as steel and aluminum.
In addition, the 25% tariff scheduled to be imposed on foreign auto parts starting May 3 will also be adjusted.
This measure will be applied retroactively, and tariffs already paid will be eligible for refunds. The U.S. government will allow refunds of parts tariffs up to an amount equivalent to 3.75% of the price of an American-made vehicle for one year. In the second year, this will be reduced to 2.75%, after which it is expected to be gradually phased out.
The Trump administration had initially taken a hardline stance by announcing tariffs on automobiles and parts, but appears to have stepped back in the face of strong opposition from the U.S. auto industry and labor unions.
The Alliance for Automotive Innovation (AAI), which represents the U.S. auto industry, along with the American Automotive Policy Council (AAPC) led by General Motors (GM), Ford, and Chrysler, sent a letter to the U.S. Department of the Treasury and Department of Commerce on April 22 urging the elimination of tariffs.
In the letter, they argued that "tariffs on auto parts will disrupt the global automotive supply chain," and added, "Most suppliers do not have enough capital to withstand the disruptions caused by tariffs, and many are already struggling. If this continues, it could lead to production shutdowns, layoffs, and bankruptcies."
The signs of tariff relief from the United States are welcome news not only for the finished vehicle industry but also for the parts sector. The industry had anticipated that these tariff measures would have a more immediate impact on parts suppliers than on finished vehicle manufacturers.
According to the Korea International Trade Association, Korea's exports of auto parts to the United States reached a record high of $8.222 billion last year. The United States accounts for 36% of Korea's total auto parts exports.
An industry official stated, "Indiscriminate imposition of tariffs could worsen profitability not only for finished vehicle manufacturers but also for parts suppliers, and could lead to higher car prices for consumers." The official added, "Taking this into account, the U.S. government has given companies time to reorganize their supply chains."
On the evening of April 29 (local time), President Trump is expected to attend a rally on the outskirts of Detroit, Michigan, where he will emphasize his strategy for reviving American manufacturing. He is expected to announce the details of this tariff relief measure before attending the event.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
