U.S. President Donald Trump signed two executive orders Tuesday aimed at easing the pressure on America’s automotive sector, which has been grappling with a tangle of overlapping tariffs disrupting the North American supply chain.
Speaking from the White House, Trump said the measures are designed to provide short-term relief during a time of transition. “We just wanted to help them endure this little transition, short term… If they can’t get parts, you know it has to do with a very small percentage — we didn’t want to penalize them,” he told reporters.
A senior Commerce Department official explained that one executive order will grant automakers who finish their vehicles in the U.S. a rebate on imported auto parts equivalent to 15 per cent of the vehicle’s retail price. That rebate is set to drop to 10 per cent next year. The move is intended to cushion the blow of a 25 per cent tariff on auto parts scheduled to take effect next month.
The administration acknowledged that many manufacturers are struggling to secure parts quickly enough to maintain production schedules, and the rebates aim to address that challenge. “So this is just a little transition,” Trump reiterated.
Earlier this month, Trump imposed a 25 per cent tariff on all vehicle imports, in addition to duties on steel, aluminum, and a broad 10 per cent universal tariff, as well as a 145 per cent tariff on imports from China. The cumulative weight of these levies has triggered alarm across the automobile sector.
The second executive order signed Tuesday ensures that companies paying the new automobile tariffs will not be subject to additional overlapping duties — including those already in place on aluminum and steel — effectively preventing tariff stacking.
Treasury Secretary Scott Bessent said the changes are part of a broader goal to bring auto manufacturing back to U.S. soil. “We want to give the automakers a path to that quickly, efficiently, and create as many jobs as possible,” Bessent told reporters.
The impact on Canada’s auto sector remains uncertain. Vehicles that comply with the Canada-U.S.-Mexico Agreement (CUSMA) are partially exempt from Trump’s auto tariffs, though duties still apply to the non-American parts of Canadian-assembled vehicles.
Candace Laing, President and CEO of the Canadian Chamber of Commerce, expressed deep concern about the shifting landscape of U.S. trade policy. “North American autoworkers, plants, and investors can’t predict how the U.S. administration will wake up and feel on any given morning,” she said. “Business plans are delayed. Pricing pressure is rising.”
Laing added that only a full rollback of tariffs will bring the stability needed for long-term investment.
Automakers on both sides of the border have been pressing for relief. General Motors CEO Mary Barra said her company appreciates “the productive conversations” with the administration and remains hopeful about continued cooperation.
“We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy,” she said in a statement.
Last week, six major automotive lobbying groups sent a letter to the administration warning that continued tariffs could devastate the industry. “Most auto suppliers are not capitalized for an abrupt tariff-induced disruption,” they wrote, adding that many are already financially distressed and face looming production shutdowns, layoffs, or bankruptcy.
The announcement coincided with Trump’s trip to Michigan for a rally marking his administration’s first 100 days. Michigan, home to the Detroit Three — Ford, General Motors, and Chrysler (now part of Stellantis) — has been particularly vocal in opposing the tariffs.
Matt Blunt, president of the American Automotive Policy Council, emphasized that stacking multiple tariffs on the same products has created untenable conditions for automakers. Stellantis chairman John Elkann also welcomed the move, stating, “While we further assess the impact of the tariff policies on our North American operations, we look forward to continued collaboration with the U.S. administration to strengthen a competitive American auto industry and stimulate exports.”
Despite Trump’s past claims that Canada is siphoning away American auto jobs, the two countries have developed a deeply integrated automobile sector since the early 20th century. The 1965 Auto Pact and, more recently, CUSMA have allowed vehicles and parts to cross the border multiple times before final assembly.
“Whether the U.S. administration likes it or not, we’re in this together and supply chains don’t heal quickly once broken,” Laing warned.