On his 100th day in office, President Donald Trump is set to announce a softening of auto tariffs during a rally in Michigan, a significant location due to its historical ties to the U.S. auto industry. While maintaining a 25% tariff on imported cars, the administration will prevent additional tariffs such as those on steel and aluminum from compounding on top of this. An offset plan will be introduced, offering domestic manufacturers credits against tariffs for parts, calculated based on a percentage of the Manufacturer's Suggested Retail Price (MSRP) of cars built in the U.S. The plan aims to incentivize domestic production, allowing credits to counter tariffs when 15% of a vehicle's value involves foreign parts. Manufacturers using 85% U.S. parts or parts from the USMCA trade agreement will avoid these tariffs entirely, promoting growth in domestic employment and factory construction over a two-year period.

President Trump will announce a change in auto tariff policies on his 100th day in office, focusing on easing the financial burden on domestic auto manufacturers while maintaining a 25% tariff on imported cars.

The current 25% tariff on imported vehicles will remain, but additional tariffs, such as those on steel and aluminum, will not be added on top, effectively reducing the overall tariff burden.

An offset scheme is introduced to provide credits against tariffs for domestic manufacturers, calculated at 3.75% of the MSRP for the first year and 2.5% for the next, based on U.S. production.

This offset plan allows manufacturers to utilize credits against tariffs for auto parts, promoting the use of U.S.-made components by effectively nullifying tariffs when 85% of parts are domestically sourced or come from USMCA agreements.

The policy shift is designed to stimulate the domestic auto industry, encouraging manufacturers to grow their operations, increase employment, and build new factories in the U.S. over a two-year timeline.

The administration clarified that the offset strategy is not a rebate but rather a method to support domestic manufacturers financially without impacting government revenue.

The announcement is strategically made in Michigan, reflecting its historical significance as a former auto manufacturing hub and symbolizing a commitment to revitalizing American industry.