Automakers smile thinly as Trump prepares limited tariff relief
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President Trump is expected to deliver relief on some tariffs for the auto industry when he visits Michigan later Tuesday to celebrate 100 days in office, but automakers aren't in a partying mood.
Why it matters: Across the industry, carmakers remain in limbo, pulling back on capital investments and postponing product decisions while they wait to learn the latest twist in the president's trade policy.
Driving the news: Trump is expected to sign an executive order on auto tariffs this afternoon, before departing for a 6 p.m. ET rally outside Detroit.
- He's expected to lift some levies on foreign parts for vehicles made inside the U.S., and to prevent duties on foreign-made cars from stacking on top of other tariffs he has imposed, including steel and aluminum tariffs.
Between the lines: "I think they woke up to the impact of the stacking of the tariffs," Lenny LaRocca, U.S. auto sector leader for the consulting firm KPMG, tells Axios.
- "There could be instances where suppliers get hit by 25% tariffs on foreign parts, and then another 25% for steel and aluminum from Mexico and Canada, and if they're not USMCA-compliant, they could get hit again for another 25%."
Until automakers have details, they're not making any expensive decisions.
- GM on Tuesday pulled its earnings guidance for the year, suspended plans to buy back $4 billion of its shares and postponed its earnings call, citing the need for more information on tariffs.
- The company's first-quarter capital expenditures dropped by a third from a year ago, to $1.8 billion.
What they're saying: Everyone is trying to put on a good face, however.
- "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. We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together," said GM CEO Mary Barra in a statement.
- "Stellantis appreciates the tariff relief measures decided by President Trump," added Stellantis Chairman John Elkann in his own statement. "While we further assess the impact of the tariff policies on our North American operations, we look forward to our continued collaboration with the U.S. Administration to strengthen a competitive American auto industry and stimulate exports."
The intrigue: Ford CEO Jim Farley also welcomed the relief, before adding a dig against rivals who don't have as big a US manufacturing footprint as Ford.
- "If every company that sells vehicles in the U.S. matched Ford's American manufacturing ratio, 4 million more vehicles would be assembled in America each year. The U.S. would see a windfall of new assembly and supplier factories and hundreds of thousands of new jobs," Farley said in a release.
What's next: For now, automakers are concerned with ensuring continuity of their supply chains, says LaRocca.
- "They're playing nice in the short term but now they have to start assessing their mid-term and long-term strategies."
The bottom line: Tariffs are still going to hurt, but the industry will learn to grin and bear it.
Editor's note: This story has been updated with analyst comments.
