President Donald Trump is giving domestic automakers additional relief from tariffs on auto parts, extending what was supposed to have been a short-term rebate until 2030.
It’s part of a proclamation Trump signed Friday that also made official a 25% import tax on medium and heavy duty trucks, starting Nov. 1.
The action reflected the administration’s efforts to use tariffs to promote American manufacturing while also trying to shield the auto sector from the higher costs that Trump’s import taxes have created for parts and raw materials.
The special rebate initially announced in April had been set to be lowered and then expire in 2027. At the time, Trump described it as short-term aid “during this little transition” with the expectation that automakers would move production lines back to the U.S.
The extension and adjustments came after conversations with the auto industry, senior administration officials said. The goal is to both expand domestic production and make it more competitive. The officials insisted on anonymity as a condition for talking to reporters ahead of Trump signing the proclamation.
The amended action provides a rebate of 3.75% relative to the sales price of a domestically assembled vehicle. That figure was reached by putting the 25% import tax on parts that make up 15% of a vehicle’s sales price. Multiplying those two percentages together is equal to 3.75%.
The rebate will also now be offered to manufacturers of trucks and engines, officials said.
Trump had posted on his social media site Oct. 6 about the new tariffs on imported trucks. Buses will also be tariffed at 10% as part of the action.
The new tariffs do not apply to imports covered under the U.S.-Mexico-Canada Agreement on trade. That pact, which went into effect in 2020, is up for renegotiation next year.
The moves come at a delicate moment for the auto industry as consumers are enduring sticker shock. According to Kelley Blue Book, buyers of new autos spent an average of $50,080 in September, the highest average on record. New auto prices have increased 3.6% from a year ago.