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U.S. President Donald Trump (right) shakes hands with Defense Secretary Pete Hegseth at the Selfridge Air National Guard Base in Harrison Township, Michigan, on April 29. / Reuters-Yonhap News

The Trump administration on April 29 announced a measure aimed at easing the burden of automotive tariffs, offering temporary relief for certain U.S.-made vehicles sold domestically.

Under the new policy, a 25% tariff will be waived for two years on 10 to 15 percent of vehicles manufactured in the U.S. and sold within the country. However, the 25% tariff on imported vehicles, which took effect on April 3, will remain in place. Cars that use Chinese-made parts will not be eligible for the exemption.

A separate 25% tariff on imported auto parts is still set to go into effect on May 3.

According to a senior Commerce Department official, automakers that submit production and sales records to the department will receive a “credit” equivalent to 10 to 15 percent of the vehicle’s Manufacturer’s Suggested Retail Price (MSRP). This credit can then be applied to offset future duties on imported auto parts.

In the first year, manufacturers will receive a credit equivalent to 15% of a vehicle’s price, reducing the 25% tariff on imported parts by 3.75 percentage points. In the second year, the credit rate drops to 10%, offsetting tariffs by 2.5%. After two years, the offset benefit will be eliminated entirely.

The measure is intended to push carmakers with U.S. factories to scale up their domestic parts production within two years.

“All vehicles completed in the United States with more than 85% domestic content will be exempt from all tariffs,” a senior Commerce Department official said.

The policy also applies to North American parts that comply with the United States-Mexico-Canada Agreement (USMCA) rules of origin. Additionally, it exempts eligible vehicles and parts from other Trump-era tariffs, including the 25% levies on Canadian and Mexican products, 25% on steel and aluminum, and 10% tariffs applied to most other countries.

President Trump told reporters, “We’re just helping them through this short transition period—we don’t want to punish them.”

Treasury Secretary Scott Besant added, “President Trump has met with both domestic and foreign auto manufacturers and is working to bring auto production back to the United States. Our goal is to help automakers do this quickly and efficiently while creating as many jobs as possible.”