- President Trump could exempt Chinese-made auto parts from import tariffs.
- Many North American automakers rely on components shipped from China.
- Trump previously granted an exemption to Chinese electronics, including iPhones.
US automakers pulling their hair out working out how to handle massively inflated parts bills as a result of President Trump’s China tariffs might just finish the month with a few strands left on their heads. The White House says Trump is considering exempting auto parts from some of the tariffs placed on other items arriving in America from China.
Though auto parts aren’t subject to the full 145 percent US tariff on some Chinese exports, they were hit with a 20 percent tax to counter China’s fentanyl exports on top of a standard 25 percent duty on auto parts from any foreign country, due to go into force on May 3.
Related: Buick Was Killing It, Then Came Trump’s Tariffs
The 25 percent tariff on parts (and cars) would remain in place, but the other portion of the stacked tariffs on car parts as well as on steel and aluminium would disappear, the Financial Times first revealed. CNBC got The White House to confirm the mooted plan only hours after six of the top policy groups representing the US auto industry, including suppliers, franchised dealers, and automakers themselves, wrote to the Trump administration asking for an exemption.
“Most auto suppliers are not capitalized for an abrupt tariff induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy,” the group wrote in a letter sent to Treasury Secretary Scott Bessent, Department of Commerce Secretary Howard Lutnick, and others.
“It only takes the failure of one supplier to lead to a shutdown of an automaker’s production line. When this happens, as it did during the pandemic, all suppliers are impacted, and workers will lose their jobs.”
More than 9.2 percent of all auto parts imported to the US in 2023 – worth $18 billion – came from China in 2023, according to figures quoted by Detroit News. In 1994, Chinese parts accounted for just 1.2 percent.
Tech Got a Pass, Will Autos?
If Trump does issue an exemption, it would be yet another tariff climbdown, though one the auto industry desperately needs. Earlier this month, he exempted China-made smartphones and electronic devices, bowing to pressure from companies like Apple and instantly destroying some of his leverage in the battle of wills with China’s Xi Jinping.
The Trump administration suggested Apple could build iPhones in the US, something Apple has said would never happen. Analysts say the unit cost to the consumer of a US-made iPhone would be around $3,500.
No Relief for Canada’s Auto Exports
But not all of Trump’s tariffs might be heading in the same direction. The President suggested this week that a 25 percent levy on cars imported from Canada could be increased.
“I put tariffs on Canada, they are paying 25 per cent but that could go up in terms of cars,” Trump said in the Oval Office on Wednesday. “When we put tariffs on, all we are doing is we are saying, ‘We don’t want your cars, in all due respect.”’
Trump went one step further, stating he doesn’t want Canada involved in the U.S. auto industry at all and accused the country of siphoning off vehicle manufacturing business.
