President Trump may exclude auto parts manufactured in China from customs tariffs. Many North American automakers rely on components supplied from China. Trump previously granted an exemption for Chinese electronic goods, including the iPhone. US automakers are pulling their hair out trying to figure out how to deal with massively inflated bills for parts due to customs tariffs on China. But by the end of the month, they might be left with only a few hairs on their heads.
The White House reports that Trump is considering exempting auto parts from some tariffs that apply to other goods arriving in America from China. Although auto parts are not subject to the full 145 percent US duty on some Chinese export goods, they have been taxed at a rate of 20 percent to counter the export of fentanyl from China, plus a standard 25 percent duty on auto parts from any foreign country, which is set to take effect on May 3rd. The 25 percent duty on parts (and cars) will remain in place, but another part of the imposed duties on auto parts, as well as on steel and aluminum, will disappear, reported The Wall Street Journal. The White House confirmed the intended plan just a few hours after six leading political groups representing the US auto industry, including suppliers, franchised companies, and the automakers themselves, wrote a letter to Trump requesting an exemption. “Most auto parts suppliers are not ready for the sudden disruptions caused by the tariff.
Many of them are already in a difficult situation and facing production stoppages, employee layoffs, and bankruptcy,” the group wrote in the letter, sending it to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and others. Over 9.2 percent of all auto parts imported into the US in 2023, worth $18 billion, were of Chinese origin in 2023, it notes. In 1994, Chinese parts accounted for only 1.2 percent. If Trump grants the exemption, it will be another tariff step back, but it is exactly what the auto industry desperately needs. Earlier this month, he exempted smartphones and electronic devices made in China, yielding to pressure from companies like Apple, and immediately destroyed part of his previous leverage in the fight with Chinese leader Xi Jinping.
The Trump administration suggested Apple build the iPhone in the USA, which they claim will never happen. Analysts say the cost to the consumer for a US-made iPhone would be approximately $3,500. Instead, not all of Trump’s tariffs are going in one direction. The president indicated this week that the 25 percent tariff on cars imported from Canada could be increased. “I imposed tariffs on Canada, they pay 25 percent, but that could increase regarding cars,” Trump said in the Oval Office on Wednesday.
“When we impose tariffs, we simply say: ‘We don’t want your cars, with respect’.” Trump went even further, stating that he does not want Canada to be involved in the US auto industry at all and accused the country of diverting from the business of making cars.