Trump signs executive order to ease auto tariffs, industry still under pressure

US President Donald Trump signed an executive order to ease the impact of auto tariffs, backing down after weeks of intense lobbying by carmakers, parts suppliers and car dealers, who warned that excessive tariffs could drive up car prices, trigger factory shutdowns and job losses. Under the executive order, signed on Air Force One, imported cars will be exempt from separate tariffs on aluminium and steel to avoid the cumulative effect of overlapping tariffs. The White House will also adjust the 25 per cent tariff on auto parts that was scheduled to take effect on May 3, allowing automakers that manufacture and sell complete vehicles in the US to claim a deduction of up to 3.75 per cent of the value of the vehicle, or 25 per cent x 15 per cent, a senior commerce department official said. The deduction will be reduced to a maximum of 2.5% (25% X 10%) after one year, and eliminated in the following year. The policy applies to vehicles produced after April 3. While the latest adjustment will go some way to relieving cost pressures for automakers, parts suppliers and dealers, it is still difficult to judge the actual financial relief. The industry as a whole is still dealing with a 25% tariff on imported cars, which could significantly drive up industry costs and exacerbate supply chain pressures.