Trump Slashes Auto Tariffs: A Win for EV Makers and Consumers

On April 29, 2025, U.S. President Donald Trump signed an executive order easing his 25% auto tariffs, offering relief to automakers after intense industry pushback, according to Reuters. This move, which includes credits for vehicles assembled in the U.S. and exemptions from other levies, could lower production costs for electric vehicle (EV) manufacturers and stabilize prices for consumers, a critical development for the EV sector.

Credits Boost Domestic EV Production

The new policy grants automakers credits up to 15% of the value of vehicles assembled in the U.S., which can offset the cost of imported parts. In the first year, this translates to duty-free imports worth 3.75% of a car’s sticker price, dropping to 2.5% in the second year, and phasing out by the third year. This structure incentivizes companies like Tesla, Ford, and General Motors (GM) to shift more parts production stateside. Additionally, the order removes overlapping tariffs, such as the 25% duties on Canadian and Mexican goods and 10% levies on other nations, streamlining costs for EV makers who rely on North American supply chains under the U.S.-Mexico-Canada Agreement (USMCA).

However, Chinese parts remain under heavy tariffs of at least 145%, signaling a continued hard stance on China. For EV manufacturers, this could mean higher costs for batteries and components often sourced from Chinese suppliers, potentially slowing the adoption of affordable models.

Economic Ripple Effects Hit the EV Market

The tariff relief comes as the U.S. economy grapples with the fallout of Trump’s broader trade policies. A Reuters poll forecasts a sluggish 0.3% annualized GDP growth for the first quarter of 2025, down sharply from 2.4% in late 2024, largely due to a surge in imports as companies stockpiled goods to avoid new tariffs. This volatility has rattled the auto industry, with GM recently pulling its annual forecast despite strong quarterly sales, citing trade policy uncertainty.

For EV owners and enthusiasts, this could mean more predictable pricing in the long term, but the immediate uncertainty might delay new model releases or impact availability. Industry leaders like GM’s CEO Mary Barra see the changes as a chance to “invest even more in the U.S. economy,” while Ford’s Jim Farley noted the relief “will help mitigate the impact on automakers, suppliers, and consumers.”

Top EVs Lead in Domestic Content

Sawyer Merritt provided a table to highlight the top 25 cars with the highest domestic content, and EVs dominate the list. The Tesla Model 3 Performance tops the chart at 87.5%, followed by the Tesla Model Y Long Range and Model Y at 85%, and the Tesla Cybertruck at 82.5%. Ford’s Mustang GT models, including the 5.0-liter and automatic transmission variants, tie with Tesla’s Model S and Model X at 80%. This information originates from a study conducted by the Kogod School of Business at American University. This high domestic content positions these EV makers to benefit most from the tariff credits, as they already prioritize U.S. production.

EVXL’s Take: A Step Forward, But Challenges Loom

This tariff rollback feels like a breath of fresh air for EV enthusiasts who’ve been bracing for higher prices amid trade tensions. It’s a smart move to support American-made EVs like Tesla’s lineup and Ford’s Mustang GT, which are already built with mostly U.S. parts. But the heavy tariffs on Chinese components could still sting—many EVs rely on affordable batteries from China, and those costs might trickle down to buyers. For EV owners dreaming of a budget-friendly ride, this relief is a win, but the road ahead might still have a few bumps. Manufacturers need to double down on domestic supply chains, and fast, to keep the momentum going.

Photos courtesy of Tesla / Sawyer Merritt.