**Washington, D.C.:** The Trump administration plans a three-year phased relief scheme reducing reimbursements on the 25% tariff for US-made car manufacturers, aiming to balance protectionism with global supply chain realities and further scrutinising USMCA vehicle content to boost domestic production.
US President Donald Trump is set to introduce phased relief cushions to the 25% tariff imposed on all automotive product imports, according to a report by The Wall Street Journal dated 28 April 2025. This adjustment signals a strategic shift in the administration’s approach to its comprehensive tariff regime on automotive imports.
The proposed relief will be implemented gradually over three years. In the first year, manufacturers of US-made cars will receive a reimbursement of up to 3.75% of the vehicle’s value, followed by a 2.5% reimbursement in the second year. By the third year, this cushion will be phased out completely, leaving the full 25% tariff in place.
This move represents another key concession under the broader tariff policy initially introduced by the Trump Administration. It aims to balance the intent of the tariffs—to encourage domestic manufacturing and reshape trade practices—with the practical difficulties faced by the automotive industry. The creation of a reimbursement system recognises the complex and often inflexible nature of global supply chains, which cannot be altered swiftly or without significant cost.
Furthermore, the tariffs have nuanced applications depending on the origin of the vehicles. Cars and automotive products imported under the terms of the United States-Mexico-Canada Agreement (USMCA) currently avoid the immediate application of the 25% tariff. However, there are plans underway to develop processes that would apply tariffs to non-US content in these vehicles, reflecting ongoing efforts to further incentivise the use of US-made components.
The Wall Street Journal highlights that this policy development is part of a broader recalibration in trade policy that acknowledges the realities of international manufacturing networks, particularly in the automotive sector. The phased reimbursement and the planned scrutiny of non-US content under USMCA are designed to encourage a gradual, manageable transition in the industry rather than abrupt disruption.
Source: Noah Wire Services
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