According to Reuters, the 25% tax rate applied to imported cars and spare parts will not overlap with taxes on aluminum, steel as well as taxes on goods from Canada and Mexico.
Automobile manufacturers will receive a credit to compensate for a 25% tax on imported spare parts used in the domestic vehicle assembly process.
Notably, manufacturers will enjoy a tax deduction of up to 3.75% of the suggested retail price in the first year. This credit level will be reduced to 2.5% until May 2, 2027, after which it will be completely terminated.
According to the explanation of White House officials and the Ministry of Commerce, this is not a cash refund, but a form of tax credit to reduce the impact of tax policies.
Finance Minister Scott Bessent said the decision was the result of meetings between President Trump and domestic and foreign automakers, with the aim of returning automobile manufacturing to the US. He affirmed that national security and economic benefits are still core factors in this adjustment policy.
Previously, the auto industry expressed concern about the possibility of overlapping taxes that could push up car prices, disrupt supply chains and affect consumer demand.
However, even with new exemptions, long-standing domestic automakers are still facing many challenges, as clearly demonstrated by General Motors' announcement of having to "re-evaluate" income indicators in the coming time.
