U.S. President Donald Trump has announced a new car tariff policy set to take effect in 2025, aimed at reducing the tax burden on American car manufacturers.

Taiwan • Business • 04/29 15:02
U.S. President Donald Trump has announced a new car tariff policy set to take effect in 2025, aimed at reducing the tax burden on American car manufacturers.

On April 29, 2025, President Trump of the United States announced a new automotive tariff policy to reduce the tax burden on U.S. car manufacturers. The new policy exempts car manufacturers who have already paid the 25% import tariff on complete vehicles from paying additional tariffs on steel and aluminum materials, and allows for retroactive refunds for duplicate taxes. Regarding the component tariffs effective May 3, the government will reduce the rates and offer a compensation mechanism. This move prompted a rise in Asian automotive stock prices, and General Motors delayed its earnings report in response to the policy.

Key Updates

04/30 00:31

U.S. President Trump signed an executive order to adjust car tariffs to support domestic manufacturing.

On April 29, 2025, President Donald Trump of the United States signed two executive orders to adjust the tariff policy on automobile and component imports, to provide a short-term buffer for American car manufacturers. The new policy allows certain vehicles assembled in the United States with foreign parts to be exempt from the 25% import tax and provides phased compensation for qualifying components. This adjustment, made after prolonged lobbying by the automotive industry, aims to protect domestic manufacturing and encourage the repatriation of supply chains to the United States.

04/29 21:30

The United States is Facing Economic Shocks Driven by Policy: Increasing Instability Due to Trade Deficit and Pressure from the Debt Ceiling.

In the spring of 2025, the U.S. economy faces instability, with a trade deficit reaching $162 billion USD as companies are importing in advance to cope with high tariffs. The consumer confidence index dropped to 86, and the manufacturing activity index fell to -35.8. Tariff policies have triggered a reorganization of supply chains, leaving the Federal Reserve in a dilemma between cutting interest rates and controlling inflation. The federal debt ceiling issue heightened market unease, causing the S&P 500 index to drop by 10% and foreign capital to withdraw. Economists warn of an imminent policy-driven economic shock.

04/29 19:02

In response to Trump's tariff policies, Taiwanese electronics manufacturing giants like Inventec, Foxconn, and Wistron have strategically established factories in Texas.

Major Taiwanese electronics contract manufacturers such as Inventec, Foxconn, Wistron, Wiwynn, Quanta, and Compal have responded to the high tariff policies of former U.S. President Trump by establishing or expanding their operations in the United States, with Texas becoming the preferred location. These companies' investments reflect their focus on the U.S. market and their quick adaptability to the restructuring of the global supply chain. Texas attracts Taiwanese investment with its vast land, stable electricity supply, and low taxes, and could become a major hub for Taiwan's electronics manufacturing industry in the U.S.

04/29 17:30

The U.S. consumer confidence index dropped to its lowest point in five years, mainly due to worries about tariff policies.

The World Large Enterprises Federation reported on April 29, 2025, that the United States Consumer Confidence Index fell to 86.0 in April, the lowest since May 2020, marking the fifth consecutive month of decline. Consumers are pessimistic about the future economy, employment, and income, especially worried about the high tariffs on Chinese goods, which has become a key factor in the drop in confidence. The tariffs have caused supply chain strains and increased prices, further impacting consumer spending plans.

04/29 15:02

U.S. Treasury Secretary Yellen: The U.S.-India trade agreement is nearing completion, and negotiations with South Korea and Japan are going well.

On April 29, 2025, U.S. Treasury Secretary Scott Bessant stated that significant progress has been made in trade negotiations between the United States and India, South Korea, and Japan. The agreement with India is nearing completion and could be one of the first agreements to be signed; the framework of the agreement with South Korea is in place, but it is influenced by the elections; talks with Japan have entered a critical phase, with the G7 summit possibly playing a key role. These negotiations are occurring in the context of President Trump's "reciprocal tariffs" policy, as Asian countries actively respond to tariff pressures.

04/29 15:02

U.S. President Donald Trump has announced a new car tariff policy set to take effect in 2025, aimed at reducing the tax burden on American car manufacturers.

On April 29, 2025, President Trump of the United States announced a new automotive tariff policy to reduce the tax burden on U.S. car manufacturers. The new policy exempts car manufacturers who have already paid the 25% import tariff on complete vehicles from paying additional tariffs on steel and aluminum materials, and allows for retroactive refunds for duplicate taxes. Regarding the component tariffs effective May 3, the government will reduce the rates and offer a compensation mechanism. This move prompted a rise in Asian automotive stock prices, and General Motors delayed its earnings report in response to the policy.

04/29 15:02

Delta Air Lines Temporarily Pauses Acceptance of New Airbus Models, Reroutes via Tokyo to Bypass U.S. Tariffs.

Delta Air Lines, in order to avoid the 10% import tariff imposed by the United States on new Airbus aircraft manufactured in Europe, has strategically rerouted the newly delivered A350-900 aircraft to Tokyo Narita Airport for international routes to avoid classification by U.S. customs as a "new import." Additionally, Delta has paused the acceptance of aircraft subject to tariffs and adjusted its delivery schedule. CEO Ed Bastian stated that if the tariffs cannot be avoided, Delta will halt aircraft acceptance. Delta has also chosen aircraft models produced in Canada and the United States to avoid tariffs, maintaining a balance between fleet expansion and cost control.

04/29 13:02

The U.S. goods trade deficit in March hit a record high of $162.0 billion, mainly due to a surge in imports.

The U.S. Department of Commerce's Census Bureau released data on April 29th, 2025, showing that the goods trade deficit in March reached a record high of $162.0 billion, an increase of $14.2 billion from February. The main reason was a surge in imports, as companies stocked up in advance to avoid potential tariffs, pushing the import value up to $342.7 billion. Exports increased to $180.8 billion, but the growth was not enough to match the increase in imports, resulting in a wider deficit. This situation reflects how trade is dragging on economic growth, with forecasts predicting a 0.4% annualized decline in GDP for the first quarter.

04/29 07:04

In response to shifts in trade dynamics, the bicycle contract manufacturing factory plans to build a new factory in Vietnam by 2025 to supply Europe.

In response to changes in global trade policies and tariff pressures, the bicycle manufacturing contractor Mingxi Co., Ltd. (6804) is adjusting its production sites and shipping strategies. The company plans to establish a factory in Vietnam by mid-2025 and begin mass production by the end of 2026 to supply the European market. This move aims to reduce dependence on high-tariff markets, increase operational flexibility, and restructure the global supply chain layout.

04/29 03:06

The supply chain is cooling down, from warehouses to ports, as the rush from the US-China tariff war subsides.

The surge in orders due to the U.S. imposing high tariffs on China has cooled off, and the trend of electronics manufacturers shipping early has vanished, resulting in decreased demand for sea and air transport between China and the U.S. Shipments of products such as laptops and iPhones have slowed down, and container orders at the Port of Los Angeles have plummeted. Chinese export companies are pivoting to emerging markets and adjusting their supply chain strategies. U.S. ports and the retail sector are feeling the impact, with import volumes projected to drop by 20%.

Key Points of the New Tariff Structure: Elimination of Overlapping Tariffs and Compensation for Parts Tariffs

According to U.S. Secretary of Commerce Howard Lutnick, the core of the Trump administration's adjustment to automobile tariff policy focuses on the "elimination of overlapping tariffs" and a "compensation mechanism."

Firstly, automobile manufacturers who have already paid the 25% import tariff on complete vehicles will no longer be subject to additional tariffs on raw materials such as steel and aluminum. This policy is retroactive, meaning manufacturers can apply for refunds of previously paid overlapping taxes.

Secondly, the measure originally set to impose a 25% tariff on imported auto parts starting May 3 will also be adjusted. Under the new policy, the government will provide a three-year compensation mechanism:

  • First year: Each U.S.-made vehicle can receive a tax refund equivalent to 3.75% of the vehicle's price;
  • Second year: The refund rate will decrease to 2.75%;
  • From the third year onwards: The compensation mechanism will be canceled.

This compensation will apply to all vehicles assembled in the U.S. but using imported parts, and manufacturers will proactively apply for tax refunds.

Policy Background and Industry Response

Trump chose to announce this policy in Michigan, the heart of the U.S. automotive industry, on the 100th day of his second term. Michigan is home to the headquarters of major automakers like General Motors, Ford, and Stellantis, as well as over a thousand suppliers, highlighting the symbolic significance of the announcement.

Lutnick stated, "This agreement is a significant victory for the President's trade policy, not only rewarding companies that produce domestically but also providing a good development platform for manufacturers committed to investing and expanding production in the U.S."

General Motors CEO Mary Barra expressed approval: "We appreciate the President's support for the U.S. automotive industry and the millions of American workers. This policy creates a fairer competitive environment for companies like GM, giving us more opportunities to invest in America."

General Motors Postpones Earnings Release, Withdraws Full-Year Financial Forecast

Due to policy changes, General Motors (GM) announced a postponement of its first-quarter earnings call, originally scheduled for April 29, to May 1. The company stated it needs more time to assess the potential impact of the new tariff policy on its full-year operations.

General Motors' first-quarter revenue was $44.02 billion, an increase of 2.3% year-over-year, exceeding market expectations of $43 billion; adjusted earnings per share were $2.78, also above the expected $2.74. However, net income decreased by 6.6% to $2.8 billion, and adjusted EBIT fell by 9.8%.

CFO Paul Jacobson noted, "We believe the future impact of tariffs could be significant. Until the situation becomes clearer, we will not make specific decisions on any major strategic changes."

GM also announced the withdrawal of its full-year 2025 financial forecast, which initially estimated net income of $11.2 to $12.5 billion, which did not factor in the impact of tariffs.

Asian Auto Stocks See a General Increase

Following the Trump administration's announcement of the new tariff structure, the stock prices of major Asian automakers saw a general increase during Tuesday's trading session, reflecting the market's positive response to the policy easing:

  • Toyota rose 3.6%
  • Nissan rose 2.3%
  • Honda rose 1%
  • Hyundai rose 1.2%
  • Kia rose over 2%

Analysts pointed out that these increases reflect market expectations of stable demand in the U.S. auto market, especially for manufacturers with assembly plants in the U.S. but reliant on Asian parts supply, as the compensation mechanism is expected to alleviate cost pressures.

References

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