Trump approves expanding credits for US auto production, issues new 25% truck tariffs

WASHINGTON – US President Donald Trump on Oct 17 signed orders approving significant tariff relief for US auto and engine production and setting new 25 per cent tariffs on imported medium- and heavy-duty trucks and parts starting Nov 1.

The tariffs, which the orders say are being made on national security grounds, are

aimed at shifting more auto production to the United States

but could be a significant blow to Mexico, which is the largest exporter of medium- and heavy-duty trucks to the United States.

Mr Trump is also setting a 10 per cent tariff on imported buses.

His order makes automakers eligible for a credit equal to 3.75 per cent of the suggested retail price for US assembled vehicles until 2030 to offset import tariffs on parts.

He is also extending the import adjustment offset credit for US engine production and for US medium- and heavy-duty truck production.

The new tariffs cover all Class 3 to Class 8 trucks, including large pickup trucks, moving trucks, cargo trucks, dump trucks, and tractors for 18-wheelers.

Mr Trump in October said the tariffs were to protect manufacturers from “unfair outside competition” and the move would benefit companies such as Paccar-owned Peterbilt and Kenworth, and Daimler Truck-owned Freightliner.

The US Chamber of Commerce earlier urged Mr Trump not to impose new truck tariffs, noting the top five import sources are Mexico, Canada, Japan, Germany, and Finland “all of which are allies or close partners of the United States posing no threat to US national security”.

Reuters first reported the details of the auto tariff action on Oct 3.

The order provides GM, Ford, Toyota Motor, Stellantis, Honda, Tesla, and other automakers with financial relief against tariffs paid on imported auto parts that were previously imposed by the Trump administration.

The US Commerce Department said in June it planned an import adjustment offset equal to 3.75 per cent of the suggested retail price for eligible US assembled vehicles through April 2026 and then a second year at 2.5 per cent to address tariffs from imported automobile parts.

The revised credit expands it to five years, keeps it at 3.75 per cent throughout and extends it to more parts, which makes it more valuable for automakers and could give companies more incentive to shift production, Republican Senator Bernie Moreno said.

Ford chief executive officer Jim Farley said Mr Trump’s order would help make auto parts affordable for US production and the new import tariffs on larger trucks would help level the playing field with imports.

In May, Mr Trump imposed 25 per cent auto tariffs on more than US$460 billion (S$595.8 billion) worth of imports of vehicles and auto parts annually, but has since struck deals to reduce those tariffs on some countries including Japan, Britain and the European Union.

The US Commerce Department said in August it was hiking steel and aluminium tariffs on more than 400 products including numerous auto parts totaling US$240 billion in annual imports. The parts include automotive exhaust systems and steel needed for electric vehicles as well as components for buses.

GM said earlier in 2025 the company will face up to US$5 billion in gross tariff-related costs in 2025, while Ford cited a US$3 billion gross hit. REUTERS