President Trump signed orders on Friday to enhance credits for US auto and engine manufacturing while imposing new 25% tariffs on imported medium- and heavy-duty trucks and parts effective November 1. The tariffs, justified on national security grounds, aim to encourage more auto production in the US but could impact Mexico, the largest exporter of such trucks to the US.
Additionally, a 10% tariff on imported buses was announced by Trump. The orders provide automakers with a 3.75% credit on the retail price of US assembled vehicles until 2030 to counter part import tariffs. This credit extension also applies to US engine production and medium- to heavy-duty truck manufacturing.
The new tariffs encompass all Class 3 to Class 8 trucks, including various types like pick-up trucks, cargo trucks, and tractors for 18-wheelers. Trump’s rationale for the tariffs was to safeguard domestic manufacturers from unfair competition and benefit companies like Peterbilt, Kenworth, and Freightliner.
Despite opposition from the US Chamber of Commerce, Trump proceeded with the move. The order grants financial relief to major automakers against previous tariffs on imported auto parts. The Commerce Department’s revised credit now spans five years, offering stability at 3.75% and covers more parts, incentivizing production relocation.
Ford CEO Jim Farley praised the order for making auto parts more affordable for US production and believes the new import tariffs on larger trucks will help level the playing field. Trump had earlier imposed 25% auto tariffs on over $460 billion worth of imports annually, negotiating reduced tariffs with countries like Japan and the EU.
Subsequently, the Commerce Department increased steel and aluminum tariffs on various auto parts, affecting a significant portion of the annual $240 billion imports. GM and Ford anticipate substantial tariff-related costs, with GM projecting up to $5 billion and Ford facing a $3 billion impact this year.