U.S. President Donald Trump has signaled a possible easing of automobile tariffs to give car manufacturers more time to shift production back to American soil, offering a glimmer of relief amid the administration’s aggressive trade measures.
Speaking from the Oval Office on Monday, Trump said his administration is considering flexibility for automakers who rely on parts manufactured abroad but intend to move operations domestically.
“I’m looking for something to help some of the car companies, where they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time because they’re going to make them here,” Trump stated.
The remarks come in the wake of a separate move to temporarily exempt electronic goods from newly imposed tariffs. Both decisions represent a partial rollback from the sweeping 25% tariffs on automobile imports announced on April 3, which drew fierce pushback from major U.S. automakers.
Ford Motor Co., General Motors, and Stellantis NV—the parent company of Chrysler—have reportedly lobbied the White House for carve-outs, particularly on low-cost car components. These parts, when imported from outside the United States, would not only face the full 25% duty but could also be subject to additional taxes, further straining profit margins.
New Trade Probes Signal Expanding Tariff Agenda
Amid the automotive tariff discussions, the U.S. Department of Commerce announced new national security investigations into the semiconductor and pharmaceutical sectors. The inquiries, launched under Section 232 of the Trade Expansion Act, may pave the way for further tariffs, heightening uncertainty across global supply chains.
In a Sunday post on social media, Trump underscored the temporary nature of the electronic exemptions and warned that “NOBODY is getting ‘off the hook’ for the unfair Trade Balances.”
The Commerce Department’s semiconductor probe aims to evaluate the national security implications of imports involving semiconductor manufacturing equipment and related technologies. Similarly, the pharmaceutical investigation will scrutinize imports of finished drugs, medical countermeasures, active pharmaceutical ingredients, and other key inputs.
Market Response: European Stocks Rebound on Tariff Relief Hints
Trump’s softer tone on auto tariffs buoyed investor sentiment in early European trading. As of 5:18 a.m. CEST, futures pointed to modest gains across key indexes: Germany’s DAX climbed 0.34%, France’s CAC 40 rose 0.21%, and the UK’s FTSE 100 added 0.18%.
The uptick follows a month-long rout in European auto stocks. Leading German manufacturers—Volkswagen, BMW, Porsche, and Mercedes-Benz—have all seen shares tumble between 15% and 18% since the U.S. tariff plans were first unveiled.
While automakers may breathe a sigh of relief, tech and pharmaceutical firms in Europe face fresh headwinds. The looming U.S. investigations could result in new duties that disproportionately impact firms like ASML and Novo Nordisk.
ASML, Europe’s top chip equipment maker, is in the spotlight as it prepares to report earnings on Wednesday. Meanwhile, Novo Nordisk, which relies heavily on U.S. sales for its weight-loss treatments, remains vulnerable to policy shocks. The company posted its steepest monthly decline in March following poor clinical trial outcomes, and Trump’s tariff threats could further pressure its margins.
Euro Holds Firm Amid Global Trade Turmoil
In currency markets, the euro held steady above $1.13 during Tuesday’s Asian session, maintaining its strongest position since 2022. Analysts attribute the strength to the euro’s haven appeal amid the ongoing volatility stemming from the Trump administration’s trade policies.
On Monday, the EUR/USD pair briefly surged past the $1.14 mark, with traders betting that continued economic and geopolitical uncertainty will sustain upward momentum for the currency.
The European Central Bank is widely expected to cut interest rates for a third consecutive time on Thursday, a move intended to counterbalance economic fragility in the face of global trade disruptions.
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