Good News for the Automotive Industry: Trump Administration Offers Tariff Relief
In a welcome development in the saga of tariffs imposed by US President Donald Trump, a proclamation was signed yesterday at the White House, authorizing a certain level of compensation for automotive manufacturers that import auto parts and assemble vehicles in the United States.
The 25% tariffs on imported automobiles, announced previously, came into effect on April 3, 2025, while the 25% tariffs on auto parts are set to take effect on May 3, 2025. Yesterday's measure offers compensation for a portion of the tariffs on auto parts used in vehicles assembled in the US, equivalent to 3.75% of the suggested retail price for American production by a manufacturer for the following year, and 2.5% of American production.
The latest measures will also allow automotive manufacturers to avoid multiple tariffs. For example, a manufacturer may only have to pay 25% tariffs on a specific auto part without having to pay an additional 25% tariffs on the steel and aluminum materials used in that part.
On April 21, an alliance of American and international automotive manufacturers sent a letter to the Trump administration requesting a similar tariff exemption to the one granted to electronic products. The tariffs on auto parts will disrupt the global automotive supply chain, triggering a domino effect that will lead to higher car prices for consumers, decreased sales for dealerships, and make vehicle maintenance and repair both more expensive and less predictable.
This is good news for Tunisia, whose mechanical and electrical industries sector contributed 46.3% of its exports in 2024. Americans imported 8 million vehicles in 2024, with a significant portion of Europe, in turn, importing automotive components from Tunisia.
