Trump weighs tariff relief for automakers to boost domestic production

WASHINGTON: On Monday, President Donald Trump hinted at the possibility of temporarily exempting the auto industry from the tariffs he previously imposed to allow car manufacturers more time to adjust their supply chains.

“I’m looking at something to help some of the car companies,” Trump stated to reporters in the Oval Office, emphasizing that automakers need time to move production to the US from Canada, Mexico, and other countries.

“They need a little bit of time because they’re going to make them here, but they need a little bit of time. So I’m talking about things like that.”

Matt Blunt, president of the American Automotive Policy Council, which represents Ford, General Motors, and Stellantis, expressed agreement with Trump’s aim to boost domestic production. He warned that broad tariffs on parts could jeopardize this goal and acknowledged that transitioning supply chains takes time.

Trump’s suggestion marked yet another potential shift in his tariff approach, as financial markets reacted anxiously to his persistent import taxes, raising concerns among Wall Street economists about a looming recession. When he initially introduced a 25 percent tariff on autos on March 27, Trump described it as “permanent.”

However, his stance on trade has become increasingly inconsistent as he tries to mitigate any negative economic and political repercussions from his policies.

Last week, following a significant bond market sell-off that led to rising interest rates on US debt, Trump announced a temporary reduction of broader tariffs from various countries to a baseline rate of 10 percent for 90 days while negotiations continued.

Concurrently, he raised import taxes on China to 145 percent but temporarily exempted some electronics, including those manufactured by Apple, by applying a lower 20 percent tariff.

“I don’t change my mind, but I’m flexible,” Trump remarked on Monday.

This flexibility has contributed to growing uncertainty regarding Trump’s future intentions and objectives. The S&P 500 stock index rose by 0.8 percent on Monday but remains nearly 8% down for the year. Interest rates on 10-year US. Treasury notes have also increased, hovering around 4.4 percent.

Economists, however, indicate that the rapid changes have been disorienting, joking that he might need “a neck brace.” They also cautioned that the damage to consumer, business, and market confidence may already be irreversible.

On Monday, Maroš Šefčovič, the European Commissioner for Trade and Economic Security, announced via X that he engaged in trade negotiations with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, emphasizing the EU’s readiness for a fair deal, including the proposal of reciprocal 0-for-0 tariffs on industrial goods and addressing non-tariff barriers.

Study finds Trump’s 25pc auto tariffs could cost US automakers $108 billion

Trump also mentioned his recent discussion with Apple CEO Tim Cook, suggesting he “helped” the company.

Many Apple products, particularly the popular iPhone, are assembled in China. Apple did not respond to requests for comments regarding the administration’s latest tariff fluctuations. Even if the exemptions on electronics are only temporary, they provide Apple with some time to mitigate the trade war’s effects on its iPhone sales in the US. This prospect buoyed Apple’s stock price by 2 percent on Monday, although it later retreated from an earlier 7 percent gain as investors grappled with the potential for more tariffs on Chinese-made products in the coming weeks.

Wedbush Securities analyst Dan Ives noted that while Apple is better positioned than it was a week ago, there remains “mass uncertainty, chaos, and confusion about the next steps ahead.”

One avenue that Apple might be exploring during the current tariff break is relocating more iPhone production from China to India, where it has begun to expand manufacturing during Trump’s prior trade war era.

The Trump administration has argued that its tariff strategy has isolated China as the US negotiates with other countries. Conversely, China is working to strengthen ties with Asian nations affected by Trump’s tariffs, as evidenced by a meeting between Chinese leader Xi Jinping and Vietnam’s Communist Party General Secretary To Lam, where they conveyed that no one benefits from trade wars. When questioned about this meeting, Trump insinuated that the two countries were conspiring to harm the US economically by “trying to figure out how do we screw the United States of America.”