Automotive News Europe — 2025-04-09
Automotive Industry
President Donald Trump is pausing reciprocal tariffs on most countries for 90 days and is instead implementing a base tariff of 10 percent on most goods.
The pause does not extend to sectoral tariffs, including autos, Treasury Secretary Scott Bessent said at an April 9 news conference at the White House. Those tariffs include a 25 percent duty on vehicle imports that went into effect April 3, as well as steel and aluminium levies.
The move represents an about-face by the Trump administration, which implemented reciprocal duties on countries earlier in the day April 9. Those reciprocal duties will no longer apply and will be replaced by a 10 percent levy for 90 days while the White House negotiates with other nations on trade, Bessent said. “You have to have flexibility” on tariffs, Trump told reporters.
The reciprocal tariffs do not apply to vehicles and parts subject to the auto tariff, nor do they apply to steel and aluminium imports. But many segments were hoping for relief.
Glenn Stevens Jr., executive director of the MichAuto regional trade group, said in a statement that he wanted to see any pause extended to tariffs on assembled vehicles and components, as well as steel and aluminium, critical materials for the auto industry. “MichAuto continues to advocate for protecting the automotive industry’s complex international supply chain framework from harmful fragmentation that weakens its global competitiveness,” he said.
The tariff pause does not apply to imports from China. Trump said he would raise tariffs on those goods to 125 percent after China retaliated against his latest round of levies. Trump had previously raised the effective tariff rate on most Chinese goods to 104 percent.
“China wants to make a deal,” Trump said. “They just don’t know how quite to go about it.”
More than 75 countries have contacted the White House since Trump announced the reciprocal duties April 2, Bessent said, adding that the tariffs the administration announced then should be seen by the markets as a ceiling. “Do not retaliate, and you will be rewarded,” Bessent said.
Stocks surged on the news. The S&P 500 rose 9.5 percent, erasing much of the losses the index had incurred in recent days. Automaker and supplier stocks also climbed significantly. Shares in Ford gained 9.3 percent, General Motors stock rose 7.7 percent and Tesla shares surged 22.7 percent. Shares in Lear Corp. rose 10.2 percent.
The pause appears in part to be a reaction to the volatility in stock and bond markets since the reciprocal tariffs were announced.
“I thought that people were jumping a little bit out of line,” Trump said. “They were getting a little bit yippy, a little bit afraid.”
Trump said he was watching the bond market before announcing the pause. “The bond market is very tricky,” he said. “I was watching it. But if you look at it now, it’s beautiful — the bond market right now. But I saw last night where people were getting a little queasy.”
Dan Ives, an analyst at Wedbush, said Trump’s pullback on a “self-inflicted Armageddon tariff” came after extreme market losses. “This was the news we and everyone on the Street was waiting for as the pressure on Trump took on a life of its own,” he said in an April 9 note. “Now we would expect massive negotiations across the board.”
Tesla CEO Elon Musk posted a celebratory meme showing a cartoon gamer in a Captain America outfit with a rocket headed upward in the background.
Musk engaged in a public spat with White House trade counselor Peter Navarro in recent days over the tariffs. Musk said he prefers free trade generally, including zero tariffs with Europe.
Patrick Anderson, CEO of Anderson Economic Group, is sticking with his previous estimate of vehicle price increases in the thousands of dollars because the auto tariffs remain in effect. Anderson expects tariffs to add $2,500 to $5,000 to the prices of the lowest-cost American-made cars, and up to $20,000 for some imported models.
The reciprocal tariff pause likely bolsters hopes in the auto industry that the vehicle and parts tariffs could be reduced or removed entirely. Executives including Ford CEO Jim Farley have been lobbying the White House to avoid tariffs on auto parts, arguing they would cause large disruptions in the supply chain.
Trump said April 9 that he would consider exempting companies from tariffs.
“We’re going to take a look at that,” he said, adding that he would determine which companies to exempt “instinctively.”
Trump’s April 9 change to tariff policy won’t affect the rates that currently apply to Canadian and Mexican products, according to a White House official.
Canada and Mexico were left off the list of countries affected by Trump’s global 10 percent baseline tariff during his announcement of reciprocal tariffs on April 2. That’s still the case, according to the official, speaking on condition they not be identified.
The tariffs on Canada and Mexico that Trump implemented on March 4 remain in place. They have an exemption for goods that comply with the United States-Mexico-Canada Agreement’s regional content rules, which includes most vehicles and parts.
Separately, the auto tariffs still apply to Canadian and Mexican vehicle imports. Those that comply with the USMCA’s rules are required to pay a 25 percent tariff only on the vehicle’s non-U.S. content.