Auto groups warn supply chain risks could raise costs as plan sponsors and investors monitor impact
The administration of US President Donald Trump will move to reduce the impact of automotive tariffs, according to The Globe and Mail.
Officials said it will alleviate some duties imposed on foreign parts used in domestically manufactured cars and prevent tariffs on cars made abroad from stacking with other duties.
US Commerce Secretary Howard Lutnick stated from the White House that “President Trump is building an important partnership with both the domestic automakers and our great American workers.”
Lutnick called the deal “a major victory for the President’s trade policy by rewarding companies who manufacture domestically.”
He said it also provides runway to manufacturers who have expressed a commitment to invest in America and expand domestic manufacturing.
The Wall Street Journal first reported the development.
Automakers said on Monday that they expected Trump to issue relief from the auto tariffs ahead of his trip to Michigan, where the Detroit Three automakers and more than 1,000 major auto suppliers are based.
A coalition of US auto industry groups urged Trump last week not to impose 25 percent tariffs on imported auto parts, warning that such measures would cut vehicle sales and raise prices.
Trump had previously announced plans to impose tariffs of 25 percent on auto parts no later than May 3.
In a letter to US Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent, and Commerce’s Lutnick, industry groups representing General Motors, Toyota Motor, Volkswagen, Hyundai and others warned that “tariffs on auto parts will scramble the global automotive supply chain.”
They said the result would be a domino effect—higher auto prices for consumers, lower dealership sales, and more expensive, less predictable vehicle servicing and repairs.
The letter also cautioned, “Most auto suppliers are not capitalized for an abrupt tariff induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy,” noting, “it only takes the failure of one supplier to lead to a shutdown of an automaker’s production line.”
According to The Wall Street Journal, the decision to ease tariffs could be significant for plan sponsors managing defined benefit plans with concentrated allocations in automotive equities, as supply chain disruptions may directly impact valuations.
Institutional investors should also note that tariffs on components have historically correlated with increased costs and margin pressures across related industrial sectors.
Asset managers focusing on global automotive exposure may need to reweight holdings if further tariff escalations are avoided, potentially affecting sector rotation strategies according to recent coverage by The Wall Street Journal.
