President Donald Trump speaks as he welcomes the Super Bowl champion Philadelphia Eagles NFL football team to the South Lawn of the White House, April 28, 2025, in Washington. (Mark Schiefelbein/The Associated Press)
The 25% tariff on certain auto parts is set to take effect May 3, with administration officials explaining that auto manufacturers can use the offset credits against the tariff on auto parts. The administration stressed that the offset plan is not a rebate.
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"A part comes into the country and it gets tariffed," a senior Commerce Department official said Tuesday. "And the auto manufacturers say, ‘Look, I sold a car, I have a credit. I have an offset amount of $1,600. Please use that $1,600 tariff offset amount against this particular part.’ So it will not cost the government any money whatsoever. It is basically allowing them to bring 15% foreign parts and put that in their cars."
Tesla Inc. vehicles are parked at the company's assembly plant in Fremont, California, U.S., on Monday, May 11, 2020. Elon Musk restarted production at Teslas only U.S. car plant, flouting county officials who ordered the company to stay closed and openly acknowledging he was risking arrest for himself and his employees. Photographer: David Paul Morris/Bloomberg via Getty Images
The plan intends to allow all domestic auto manufacturers "to grow their plants, to grow their employment, and to build more factories in America," according to senior Commerce Department officials, by building in a two-year time frame to amp up the U.S. supply chain for the auto industry, according to senior administration officials.
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The White House detailed that under the plan, if a car manufacturer builds a vehicle with 85% U.S. parts or parts made under the 2020 United States-Mexico-Canada trade agreement, they will effectively not owe tariffs.
All other autos and autoparts imported to the U.S. will face 25% tariffs.
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