US Car Parts Tariff Cuts: Steel, Aluminum, and US Auto Assembly Impact
29th April 2025, Kathmandu
President Donald Trump announced cuts to certain import duties on parts used in cars assembled in the United States. The move removes extra fees on steel and aluminum components. However, the 25% tariff on fully built foreign vehicles remains intact.
US Car Parts Tariff Cuts
Administration Hails Trade Win
Commerce Secretary Howard Lutnick praised the decision as a “major success” for U.S. trade policy. He said the change rewards American factories and boosts domestic investment. “We’ll treat parts made abroad fairly,” he added.
How the Waiver Works
Automakers must bring imported parts into bonded warehouses. Then, they assemble those parts into cars on U.S. soil. Firms still pay the core 25% tariff on complete vehicle imports. Yet they avoid the additional 10% steel and 25% aluminum surcharges.
Industry Pressure and Presidential Shift
Auto trade groups had warned that high duties on parts would hike prices and disrupt production. In a joint letter, they urged Trump to rethink the plan. Initially, he set a May 3 start date for the new levies. But he reversed course just days before implementation.
Detroit-Area Rally Timing
The announcement came ahead of Trump’s “100 Days” rally near Detroit. Michigan hosts Ford, General Motors, and Stellantis plants. By easing parts duties, Trump aimed to shore up support in this key battleground state.
Mixed Reactions from Automakers
GM CEO Mary Barra expressed gratitude. “We thank the president for protecting jobs and supporting U.S. assembly lines,” she said. Ford and Stellantis have not yet issued formal comments. Still, both automakers are expected to welcome the relief.
NAFTA Legacy and Supply Chains
Experts note that car parts often cross the U.S.-Mexico and U.S.–Canada borders multiple times. Trump renegotiated the North American Free Trade Agreement earlier in his term. Automakers then maintained or increased investments in Mexico. The new waiver safeguards these integrated supply chains.
Economic Impact
Lower import costs may stabilize production schedules. Consumers could see fewer price hikes on new cars. Meanwhile, full imports still face steep barriers. That setup favors models built at U.S. plants.
Next Steps
Federal agencies must now issue formal rules. The Treasury Department and Customs and Border Protection will define which parts qualify. They will also set procedures for bonded-warehouse entries. Once finalized, the rules could roll out within weeks.
Looking Forward
This targeted relief balances job protection with healthy trade ties. It may also serve as a template for other industries. For now, all eyes turn to Michigan. Observers will watch to see if plants, workers, and buyers reap the benefits.
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