The Trump administration has signalled tariff relief on auto parts following intense lobbying by industrial leaders. On Monday, White House officials confirmed President Trump’s plan to reduce tariffs on auto parts for cars manufactured in the United States, as first reported by The Wall Street Journal. The administration will also prevent automakers from paying tariffs on top of existing levies, such as those on steel and aluminium. A proclamation formalising the change is expected to be signed by the president as soon as Tuesday.
“President Trump is building an important partnership with both the domestic automakers and our great American workers,” said Commerce Secretary Howard Lutnick in a statement. “This deal is a major victory for the president’s trade policy by rewarding companies that manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.”
The decision echoes Trump’s indication in mid-April that he wanted to “help car companies,” giving them “a little bit of time” to shift parts production domestically. Trump had exempted auto parts from the 25% tariffs until 3 May. Some major US carmakers, such as Tesla and Ford, have either paused plans for the mass production of new models or suspended shipments to China due to retaliatory tariffs.
Trump has made a series of U-turns since announcing reciprocal tariffs on all countries at the beginning of the month. Investors accelerated their offloading of US assets amid growing uncertainties, with economists warning of a sharp economic slowdown caused by the global trade war. Earlier this month, Trump also exempted electronic products from the reciprocal tariffs following significant sell-offs in Apple’s stock. “I helped Tim Cook recently and that whole business,” he told reporters.
On Monday, China once again denied any ongoing tariff negotiations with the United States, although Trump has repeatedly claimed trade talks were underway. Treasury Secretary Stott Bessent said in an interview with CNBC that “it’s up to China to de-escalate” the trade war. Nevertheless, the Trump administration appears to be softening its hard-line tariff stance, continuing to fuel a relief rally across global markets ahead of major US technology earnings later this week.
European markets open higher as global rally continues
The news, as expected, lifted European stock markets. As of 09:15 am CEST, Germany’s DAX had risen 0.46%, the Euro Stoxx 50 was up 0.33%, the CAC 40 was 0.06% higher - and the FTSE 100 was up 0.11%.
Global stock markets also extended their rebound during Tuesday’s Asian session. As of 5:30 am CEST, Japan’s Nikkei 225 was up 0.38%, Australia’s ASX 200 gained 0.96%, Hong Kong’s Hang Seng Index jumped 2%, and South Korea’s Kospi rose 0.63%. On Wall Street, US futures were also higher, with the Dow Jones up 0.12%, the S&P 500 gaining 0.16%, and the Nasdaq advancing 0.22%.
However, the euro weakened against the US dollar during the Asian session as risk-off sentiment continued to fade amid signs of a de-escalation in the US-China trade war. The retreat in haven demand pressured traditional safe-haven currencies, including the euro and the Swiss franc, while gold also pulled back sharply. As of 5:46 am CEST, the EUR/USD pair had fallen 0.37% and the USD/CHF pair had dropped 0.55% in Tuesday’s session. Spot gold also declined by 1% to $3,311 per ounce following a modest rebound on Monday.