Lutnick announces tariff relief for US-built cars with 85% domestic content

In an announcement on Tuesday, US Secretary of Commerce Howard Lutnick revealed that cars finished in the United States with at least 85% domestic content will be exempt from tariffs, reported Reuters. This policy will apply to all vehicles built within the country, and is not a rebate but an offset to tariffs already being paid

Lutnick clarified that the tariff relief will not be restricted by the automaker’s country of origin. Instead, any company willing to produce cars in the US and meet the domestic content requirement will be eligible for tariff relief.

The new policy aims to encourage manufacturers to establish or expand their production in the US.


For foreign automakers, the relief will not apply unless their vehicles meet the 85% domestic content threshold. Cars built by these companies in the U.S. without reaching the necessary content level will still be subject to tariffs.

According to the news agency, Lutnick also noted that automakers will have to pay either the steel or auto tariff, whichever is higher, but they will only pay one tariff. This policy gives manufacturers the flexibility to choose the highest tariff related to their goods.

Lutnick added that the offset amount will be applied starting April 3, the date when the tariffs are set to take effect, and will be based on production thereafter. Additionally, the parts offset is available only to the finished producer making and selling the car.

The tariff relief will be implemented gradually over a three-year period, said the US Commerce. This phased approach will allow automakers to adjust their supply chains and increase domestic content in their vehicles, ultimately strengthening U.S.-based production.

The 41st US Commerce Secy also reaffirmed that USMCA parts will not carry tariffs, and there will be no change in that approach.

"This is a 'finish your cars in America' and you win," Lutnick remarked.