Car tariffs: Trump's Detroit Auto Show

Trump deliberately chose Macomb County, Michigan, for his grand entrance. He won 56 percent of the vote in the area north of Detroit in November's presidential election, thanks in part to the support of autoworkers who work at General Motors, Ford, and Stellantis plants. Several of them were in the crowd cheering Trump on Tuesday as he celebrated his 100th day in office with a big show in their hometown.

First, Trump appeared at a military base in front of uniformed National Guardsmen. Then, he was celebrated by his supporters at a community college. The almost stately act at the National Guard, in which he repeatedly thanked Michigan's Democratic Governor Gretchen Whitmer, was followed by a belated election party with Trump fans and masses of self-praise for his own successes of the past 100 days.

Since January, Donald Trump has been making one controversial decision after another. The Republican himself considers his record—not really surprisingly—to be extremely good. He continues to work on his opponents.

But Trump had already produced the real news of the day, one that would also be of interest to Michigan's autoworkers, shortly before his appearance. Aboard Air Force One, he signed several executive orders easing tariffs on the auto industry. Automakers will now only have to pay the 25 percent auto tariffs the president had imposed in the spring. However, the industry will be exempt from other import duties—such as those on steel and aluminum imports.

This also applies to a portion of the tariffs on car parts, provided the cars are assembled in the US . Companies can seek compensation from the US government for the costs they incur as a result of the tariffs. This compensation should not exceed 3.75 percent of a car's sales price in the first year and 2.5 percent in the second year. After that, this exemption expires.

"We wanted to help them a little bit to get the transition right," Trump said before departing for Michigan, explaining the decision. He was referring to the American automakers, who are suffering massively from the tariffs because they produce millions of vehicles for the US market abroad or source parts from there. They should now be given more time to relocate their production to the US.

Trump is thus continuing his course of recent weeks. The president is willing to grant more and more tariff exemptions for individual industries. Following electronics companies like Apple, automakers are now also benefiting. They have lobbied heavily for their interests in Washington in recent weeks.

The heads of the three major US automakers met with Trump for talks. Last week, various auto associations sent a letter to US government officials. In it, they warned of a "domino effect" for the American economy and consumers. They also pointed to the ten million jobs that depend on the US auto industry and are at risk due to the import tariffs. They also distributed a study by the Center for Automotive Research. It concludes that the tariffs on auto parts would increase the cost of every vehicle produced in the US by more than $4,000 .

But Trump refused to respond to their arguments for weeks. Only in recent days has the president relented, just as he had shown his willingness to compromise in the trade war with China after Easter. The US auto bosses pursued a strategy that appears to be working in their dealings with Trump: They pointed out the negative consequences of the tariffs for their industry without publicly attacking Trump or fundamentally questioning his tariff policy.

Their statements on Tuesday regarding Trump's change of course were almost devout. Mary Barra, CEO of General Motors, thanked the president for his "support of the U.S. auto industry and the millions of Americans who depend on us." Ford and Stellantis (formerly Chrysler) made similar comments. When asked for comment, the German automakers referred to earlier statements.

Nevertheless, many question marks and problems are likely to remain for the industry. Trump only softened the tariffs, not withdrawn them, and gave the industry more time. Experts estimate that it will take longer than the two years granted by Trump to relocate global networked car production to the US, not to mention the enormous costs for the industry and consumers.

Cars for the US market have been built entirely or partially across the North American continent for years: in Detroit and the southern US states, but also in Mexico and Ontario, Canada. Currently, no car is 100 percent Made in the USA . According to a US government analysis, 37 percent of the parts for a typically American model like the Ford Cadillac Escalade come from abroad. Even Tesla, which assembles its cars for the American market in the US, relies on imports from Mexico for 20 to 25 percent.

The impact of trade barriers on networked production was already evident at Stellantis in early April. The company temporarily shut down two of its plants in Mexico and Canada due to the tariffs and laid off 900 employees in the USA. American workers would have had too little to do without production in neighboring countries.

The uncertainty caused by Trump is also affecting the business of automakers. General Motors postponed its discussion of its quarterly results with analysts on Tuesday and withdrew its profit forecast for the current year, citing the tariffs as the reason.

Trump didn't mention such bad news during his appearance in Michigan. On the contrary, he claimed to have "ended" inflation in the US, which is untrue. In reality, his tariff policy and the resulting stock market turmoil have alienated large segments of the economy. This likely prompted him to backtrack considerably. But for some observers, that's not enough. The conservative Wall Street Journal called on Trump in an opinion piece on Tuesday to completely repeal his tariffs.