Trump Might Exempt Chinese Auto Parts While Imposing Even Harsher Tariffs on Canada | Carscoops

      US President is reportedly contemplating an exemption for Chinese auto parts as the effects of tariffs on American automakers become evident.

      President Trump may exempt auto parts produced in China from import tariffs, which could provide relief for many North American car manufacturers that depend on components sourced from China. Previously, Trump granted exclusions for Chinese electronics, including iPhones.

      US automakers, grappling with significantly increased costs for parts due to Trump's tariffs on China, might find some solace as the White House indicates that Trump is considering exempting auto parts from certain tariffs imposed on other imports from China.

      While auto parts aren't subjected to the complete 145 percent tariff on specific Chinese exports, they still encounter a 20 percent tax aimed at countering China's fentanyl exports, in addition to a standard 25 percent tariff on parts from any foreign country, set to take effect on May 3.

      Although the 25 percent tariff on parts (and vehicles) will remain unchanged, the additional duties on car parts, along with tariffs on steel and aluminum, could be eliminated, as first reported by the Financial Times. CNBC confirmed the potential plan shortly after six prominent policy groups representing the US auto industry—including suppliers, franchised dealers, and manufacturers—sent a letter to the Trump administration requesting such an exemption.

      The letter addressed to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and others stated, “Most auto suppliers do not have the capital to absorb sudden tariff-related disruptions. Many are already in distress and face production halts, layoffs, and potential bankruptcy. Just one supplier’s failure can shut down an automaker’s production line, impacting all suppliers and leading to job losses for workers, similar to what occurred during the pandemic.”

      According to data cited by the Detroit News, more than 9.2 percent of all auto parts imported into the US in 2023—valued at $18 billion—originated from China. In comparison, Chinese parts made up only 1.2 percent in 1994.

      If Trump does grant an exemption, it would represent another reduction in tariffs, though one that the auto industry urgently needs. Earlier this month, he exempted smartphones and electronic devices manufactured in China due to pressure from companies like Apple, which diminished some of his leverage in negotiations with China’s Xi Jinping.

      The Trump administration hinted that Apple could produce iPhones domestically, something Apple claims is unfeasible, with analysts estimating the consumer cost of a US-made iPhone to be around $3,500.

      However, not all of Trump’s tariffs are trending downwards. The President mentioned this week that the 25 percent tax on cars imported from Canada could be raised.

      “I imposed tariffs on Canada, and they are paying 25 percent, but that could increase for cars,” Trump stated in the Oval Office on Wednesday. “When we impose tariffs, we are essentially saying, ‘We don’t want your cars, with all due respect.’”

      Trump further expressed his desire for Canada to stay out of the US auto industry, accusing the country of taking away vehicle manufacturing jobs.