Howard Lutnick says ‘deal’ has been reached on auto tariffs

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By Elisabeth Buchwald, CNN

New York (CNN) — US Commerce Secretary Howard Lutnick appeared to confirm reporting on​ Monday that a deal has been reached with automakers to​ ease tariffs, in another potential policy reversal that could grant a major reprieve for a beleaguered industry.

The Wall Street Journal reported earlier in the day that President Donald Trump is set to announce a new tariff structure for cars that avoids stacking them on top of other tariffs already in place. Currently, there’s a 25% tariff on almost all imported cars as well as 25% tariffs on steel and aluminum, two metals heavily used in cars.

“This deal is a major victory for the President’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing,” Lutnick said in a statement to CNN.

The statement did not provide any details on the parameters of the agreement.

A White House official told Reuters that the deal would be made official on Tuesday, when Trump is scheduled to travel to Michigan, the heart of the American automobile industry, to mark the first 100 days of his second term in the White House.

Automakers, dealers and car buyers have been bracing for the impact of tariffs, which could upend the market for car purchases in the coming weeks.

Experts say the 25% tariff could raise the cost to build or import cars by thousands of dollars each, as well as reduce the supply of vehicles available for sale. And with the administration also planning to put tariffs on auto parts as soon as Saturday, that could raise the price of cars even higher since all vehicles built in the US contain some imported parts.

The auto industry, including carmakers and dealers, has been lobbying for relief from the levies, saying the import taxes will have a big-size impact on Americans’ finances and snarl their own supply chains.

“We’re grateful to President Trump for his support of the US automotive industry and the millions of Americans who depend on us,” General Motors’ CEO Mary Barra said in a statement on Monday.

“We believe the President’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the US economy. We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together,” she said.

Shares in carmakers listed in Asia jumped in Tuesday in response to the news. Toyota, the world’s top carmaker, was last trading 3.6% higher. Its smaller Japanese rivals Honda gained 1% and Nissan was up 2.3%. In South Korea, Hyundai was 1.2% higher and its affiliate Kia gained more than 2%.

Exemptions needed

Last week, a coalition of US and international automakers wrote a letter to the Trump administration asking for relief from the tariffs, similar to exemptions already granted to semiconductors and consumer electronics.

“Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable,” it said.

“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,” it added.

The auto industry has been rocked over the past few weeks with the slew of new tariffs. The pain is set to deepen this weekend with an additional 25% tariff on most imported auto parts taking effect. Citing people familiar with the matter, the WSJ reported that those rates could be markedly lower.

Taken together, any auto tariff changes would be retroactive, allowing automakers to be refunded for prior tariffs paid that would no longer be in effect, according to the WSJ.

However, Trump has reversed course on tariff policies many times, meaning any new changes he makes could easily be altered.

The New York Times has separately reported that automakers will be reimbursed for some of the cost of tariffs on imported components. The reimbursement will amount to up to 3.75% of the value of a new car in the first year, but will be phased out over two years, it quoted a White House spokesman as saying.

Earlier in April, Trump told reporters that he was open to exempting some automakers from tariffs in order to give them more time to build up their manufacturing facilities in the US.

This story has been updated with additional reporting and context.

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