Trump Mulls Cut in Tariffs on Chinese Auto Parts: FT

Trump Administration Mulls Tariff Relief for Chinese Auto Parts Amid Industry Pushback

The Trump administration is reportedly considering a targeted reduction in tariffs on Chinese auto parts, a move that comes ahead of a crucial May 3 deadline and amid escalating concerns from global automakers. According to sources cited by the Financial Times, the proposed changes aim to provide relief to parts manufacturers and address broader industry disruptions tied to the administration’s ongoing tariff strategy.

Tariff Adjustments Tied to China Policy

The core of the proposed relief involves exempting car parts from tariffs that were originally implemented as part of a broader crackdown on Chinese imports linked to the fight against fentanyl production. Additionally, the plan includes a mechanism referred to as “destacking,” which would allow auto parts manufacturers to bypass tariffs on key raw materials such as steel and aluminum.

This policy reassessment comes as pressure mounts from both domestic and international automakers, who argue that the existing tariff regime significantly raises production costs and undermines global supply chains.

Mixed Messaging from Trump

Despite the ongoing deliberations, President Donald Trump appeared to contradict the reported plan during a media interaction in the Oval Office. When asked directly about possible revisions to auto tariffs, Trump stated, “No, we’re not considering it now, but at some point it could go up.” He further added a pointed remark targeting Canadian manufacturers, saying, “We don’t really want Canada to make cars for us. To put it bluntly, we want to make our own cars.”

The statement reinforced Trump’s protectionist stance even as internal discussions reportedly aim to offer selective relief to the automotive industry, particularly on component imports from China.

Status of Existing Tariffs

According to the Financial Times, the administration’s broader trade policy remains intact, with a 25% tariff on foreign-made cars still in place. The proposed 25% tariff on car parts is also scheduled to go into effect on May 3, unless a last-minute exemption is granted. As of Wednesday, the White House did not provide official comment on the reported policy shift.

Market Response

The news of potential tariff relief sparked a positive response from investors in the automotive sector. In after-hours trading, shares of General Motors Co. rose by as much as 6.1%, Ford Motor Co. climbed 3%, and Stellantis NV’s US-listed stock advanced 6.8%. The reaction reflects investor optimism that easing supply chain pressures could improve cost structures and profitability for major automakers operating in the US.

Highlights

• Trump administration considers tariff exemptions for Chinese auto parts

• Steel and aluminum tariff bypass under review via “destacking” provision

• 25% tariff on car parts still scheduled for enforcement on May 3

• Trump signals tougher stance on Canadian auto imports

• Automaker stocks rise following tariff relief speculation