Washington – President Donald Trump is reportedly contemplating a modification to existing automotive tariffs that could provide significant relief to manufacturers completing final assembly in the United States, according to recent insights shared by Republican U.S. Senator Bernie Moreno of Ohio. As the administration seeks to bolster domestic automobile production, this proposed change is anticipated to incentivize automakers to either maintain or relocate assembly operations stateside.
Moreno indicated that auto manufacturers such as Ford, Toyota, Honda, Tesla, and General Motors—identified as leading domestic content vehicle producers—could benefit from the proposed tariff adjustments. He emphasized that keeping final assembly in the U.S. would be a key focus of the policy shift: “The signal to the car companies around the world is look, you have final assembly in the U.S.: we’re going to reward you,” Moreno stated. The adjustments may include maintaining tax rebates for U.S.-assembled vehicles at 3.75%, extending these rebates for five years, and also offering incentives for U.S. engine production.
Interestingly, Moreno’s stance on tariff relief seems to have evolved. Earlier in the year, he had dismissed the notion of offering such relief, instead suggesting that complaints from the auto industry regarding trade deals with certain nations were exaggerated. He credited the administration for regulatory rollbacks and tariff exemptions that provided cost offsets.
The landscape, however, has shifted as industry leaders have faced mounting pressures from tariffs on goods sourced from Mexico and Canada. These tariffs have notably impacted the interconnected North American auto supply chain. Federal trade data indicates that, as of July, the tariffs on Mexican automotive goods eclipsed those from other major U.S. trade partners, following only China in tariff burden. If current trends persist, Mexico may soon surpass China.
The potential for tariff relief has caught many industry officials by surprise, yet it is a welcome development for those advocating for a reduction in import taxes or an extension of rebates. Nobody from the major automakers commented on the proposal immediately when contacted by media outlets.
The White House has been tight-lipped regarding the developments but has previously maintained that the administration’s tariff policies are designed to encourage domestic auto manufacturing. Current automotive tariff policy is characterized by a complex framework, which includes standardized import tax rates for most countries, bespoke trade agreements with key partners, and varying rebate structures that complicate compliance with the United States-Mexico-Canada agreement (USMCA).
Under Trump’s tariff framework, automakers have been compelled to revise profit expectations and production forecasts for the upcoming years. General Motors, for example, projected tariff-related losses between $4 billion and $5 billion, while Ford anticipates a $2 billion decrease in adjusted operating profits. Stellantis NV also reported a notable impact, estimating a hit of $1.7 billion.
Industry analysts have voiced concerns about future production levels. Warren Browne, an auto supplier consultant, forecasted that U.S. vehicle production could drop by approximately 350,000 units this year, largely attributable to tariffs. He advised industry stakeholders to brace for a long-term adjustment, cautioning that the effects of heightened tariffs could linger beyond the immediate fiscal outlook.
The conversation surrounding tariff relief is pivotal, as it may alleviate some of the operational constraints currently faced by automakers. However, without such relief, Browne warned of a challenging landscape for the industry, suggesting that the repercussions could lead to diminished executive bonuses, profit-sharing for employees, and overall manufacturing employment.
