---

PRESIDENT TRUMP RELIEVES AUTO TARIFFS

NAVIGATING THROUGH TARIFF TROUBLE

On April 29^th 2025, President Trump suspended the operation of automotive tariffs and provided other relief in the form of an import adjustment offset (see Proclamation here).  Those original automotive tariffs were announced on March 26 2025 (see Proclamation here).  In that original proclamation, the President imposed a 25% tariff on automobiles set to begin on April 3^rd.  He further announced a 25% tariff on automobile parts to begin no later than May 3^rd.  These automotive tariffs included articles made of steel and/or aluminum.  The President then issued a further proclamation which modified the March 26 2025 tariffs. 

Relief to American Firms

American and Canadian automotive firms have received relief.  On April 29^th – in advance of the tariffs on automobile parts taking effect on May 3^rd – the President suspended his 25% tariff on automobiles and delayed the tariffs on parts.  He also provided an import adjustment offset amount equal to 3.75% of the Manufacturer’s Suggested Retail Price (MSRP) in the first year, and 2.5% in the second year.

This additional reprieve may be a sign that the tariff trouble is receding in the rear-view mirror. 

Non-Stacking of Tariffs

Parallel to his automotive tariffs, the President signed a separate executive order which, among other things, chiefly prevents the stacking of tariffs.  So-called “stacking” occurs when a given article is subject to two separate tariffs at the same time. For example, an aluminum car part which is subject to tariffs first as an aluminum article, and then again as an automobile part.  In the “Non-stacking of Tariff Measures” section of this executive order, Trump relieved articles subject to the automotive tariff from the steel and aluminum tariffs.  As a result, Canadian automotive exporters and American automotive importers will not see their goods double tariffed.

Powers of the Secretary of Commerce

There is an indication of what led the President to make these adjustments; “the Secretary…advised [the President] that additional action is warranted”.  This not only points to the successful lobbying efforts of the automotive industry.  It also points to the powers of the Commerce Secretary who is specifically named – in the original tariff and the amending proclamation – as a monitor of the automotive market and the effect of the tariffs.  This monitoring role signals that other changes in tariff policy are possible and perhaps imminent.

Takeaways

The relief provided by these executive orders is a welcome reprieve for Canadian automotive manufacturers and American importers. As these troubled trade times continue there is hope that the trade war is waning, and one hopes that this trade war is lining up to resolve itself.

Still – in grappling with such a dynamic situation – automotive industry players need the advice of seasoned trade counsel. 

For help with automotive sector tariffs, click here.

Download a PDF copy of this Blog here.