President Trump signed a pair of decrees on Tuesday that fell for certain prices for car manufacturers, removing the samples that Ford, General Motors and others have complained against American manufacturing by increasing the cost of production and tightening their profits.
The changes will modify Mr. Trump’s prices, so that car manufacturers who pay a 25% rate on car imports are not subject to other direct debits, for example on steel and aluminum, or on certain imports from Canada and Mexico, depending on orders. However, the rules do not seem to protect car manufacturers from steel and aluminum prices that their suppliers pay and transmit.
Car manufacturers will also be able to qualify for price relief for a proportion of the cost of their imported components, although these advantages are deleted over the next two years.
During a rally in Michigan on Tuesday evening, Trump said that he was showing “a little flexibility” to car manufacturers, but that they wanted them to do their components in the United States.
“We gave them a little time before shooting them down if they don’t do it,” he said.
The decision to reduce the scope of prices is the last sign that the Trump administration’s decision to impose rigorous levies on almost all business partners has created challenges and economic uncertainty for American companies. But even with the concessions announced on Tuesday, administration policies will add thousands of dollars to cars prices and will endanger the financial health of car manufacturers and their suppliers, analysts said.
Trump signed the decrees on the Air Force One while he flew to Michigan, which houses the largest American car manufacturers, for a speech marking his 100 days in office.
The car manufacturers have welcomed any softening of prices, which according to them, would increase the prices of cars, lead to the drop in sales and threaten their financial viability. But the steps will leave a price of 25% on imported vehicles which entered into force on April 3 and a price on automotive parts which will take effect on Saturday. This will always increase the prices of new and used cars by thousands of dollars and will increase the cost of repairs and insurance premiums.
Tuesday, General Motors abandoned an earlier forecast of growth in solid profits this year due to the uncertainty created by Mr. Trump’s trade policies. The automaker, which sells more vehicles in the United States than any other company, said that any prediction of profits would be a “assumption”.
“Previous guidelines cannot be invoked,” said Paul Jacobson, GM financial director, during a call conference with journalists.
The automaker has also postponed a conference call with financial analysts to discuss its first quarter results, citing the Trump administration’s planned policy. The company will now hold the call on Thursday.
This decision comes only a few weeks after the administration has exempted smartphones, computers, semiconductors and other electronics from its punishing Chinese prices concerning companies like Apple that import taxes would cause American consumers.
On Tuesday, Howard Lunick, trade secretary, said that changes came from direct conversations with national car manufacturers and that the administration had been in “constant contact” with companies to analyze their business and ensure that they have done the policy.
“Donald Trump and his presidency will bring back national automobile manufacturing,” said Lunick.
The Trump administration has not admitted that the prices will injure the automakers. But Tuesday, he seemed to recognize that the return of prices would help them. In an order signed on Tuesday, the president said that changes would help reduce industry dependence on foreign manufacturing and encourage companies to extend their domestic production.
For a year, the administration will offer car manufacturers an exemption from its automotive parts prices for 15% of the retail price suggested by the manufacturer of an automobile assembled in the United States. This would fall at 10% in the second year, then would be eliminated the third year.
Car manufacturers who assemble cars in the United States will be able to request this so-called compensation by subjecting documents to the government about their imports and expected tariff costs.
In a second decree, Trump detailed new rules that will exempt companies paying a type of price by paying others. The president said that when an importation was subject to multiple types of prices, prices should not “worse” each other “because the resulting rates were higher than necessary.
The prescription said that car manufacturers paying 25% to bring cars and car parts would not be subject to prices that Trump had placed in steel and aluminum or imports from Canada and Mexico.
Products that are subject to import prices from Canada and Mexico will no longer be subject to prices on steel and aluminum, the order said. But he said that the goods that have been billed on their steel content would always be rates billed on any aluminum content.
Other tasks will always be charged on all articles, including the prices that Trump imposed on China and the prices imposed for commercial violations, such as dumping and unjust subsidy.
The last rules also leave an exemption for parts imported from Canada and Mexico which respects a treaty that Trump negotiated during his first mandate. The two countries are the main suppliers in the American automotive industry.
The exemption buys car manufacturers for a little time, said Lenny Larocca, leader in the American automotive industry of the KPMG consulting company. “It gives them a little time to plan what their strategy could be,” he said.
But car manufacturers and suppliers say that two years are not enough for them to reorganize their manufacturing operations. Even if they do, they will not be able to do many components as at lower cost in the United States as they do it elsewhere, which will cause higher prices.
Even cars made in the United States generally use much more imported parts than what would not be covered by an exemption. Most cars also contain components from Japan, South Korea or China that will be subject to prices.
“Today’s relief does not solve the more long -term challenge,” Bernstein analysts said on Tuesday in a note. “The prices of American cars are headed higher when the economic moment is fading.”
However, self -managed leaders have expressed their gratitude that Trump responded at least to some of their concerns. In a press release on Monday, Mary T. Barra, the general manager of GM, said that the company appreciated “productive conversations with the president and his administration”.
“The leadership of the president helps to level the rules of the game for companies like GM and allowing us to invest even more in the American economy,” she said.
“Stellantis appreciates the price rescue measures decided by President Trump,” said John Elkann, president of the company owner of Dodge, Jeep, Ram and Chrysler, in a statement. “Although we evaluate the impact of pricing policies in our North American operations in more detail, we are impatiently awaiting our continuous collaboration with the American administration to strengthen a competitive American automotive industry and stimulate exports.”
The leaders also suggested that they hoped that continuous talks with administration officials would lead to new concessions. “We will continue to work in close collaboration with the administration to support the president’s vision for a healthy and growing automotive industry in America,” said Jim Farley, CEO of Ford, in a statement.
The exemption seems to have been conceived in part by Mr. Lutnick, who has played a role in the guarantee of lucrative exemptions for certain industries in recent months. In a statement on Monday, he described the agreement “major victory for the president’s trade policy” and said that it would provide “a track to manufacturers who have expressed their commitment to investing in America”.
Véronique de Rugy, principal researcher of the Mercatus Center, described The Move as “Shakedown” of the Trump administration, saying that she had imposed pain on car manufacturers and then asked for promises of investments.
“Trump’s prices have created a crisis for car manufacturers, and now the administration offers partial relief,” she said.
NEAL E. BOUDETTE And Tony Romm Contributed reports.
