[SMM Analysis] Between Retreat and Advance: The Pragmatic Compromise of U.S. Auto Tariff Policies and the Challenges of Global Supply Chain Restructuring

On the 29th, President Trump signed a notice allowing for a certain degree of compensation for automotive manufacturers that import auto parts and assemble vehicles in the United States. This latest move reflects the ongoing opposition from various sectors in the United States to the government's tariff policies, which is putting increasing pressure on the administration.

According to the notice, the compensation is intended to offset a portion of the tariffs on auto parts assembled in the United States. The maximum compensation amount can reach up to 3.75% of the retail price of the vehicle. This upper limit will be reduced to 2.5% of the vehicle's retail price in the second year.

The 25% tariff on imported vehicles (including new energy vehicles) that took effect on April 3, 2025, and the proposed 25% tariff on critical auto parts scheduled to take effect on May 3, constitute the core measures of U.S. trade protectionism.

A 100% tariff has been imposed on Chinese electric vehicles (EVs) (originally 25%). The specific tariff data is shown in the figure.

The announcement on April 29 allows domestic U.S. automakers to apply for tariff compensation:

• In 2025: The maximum compensation rate is 3.75% of the vehicle's retail price (calculated as 25% tariff × 15% compensation ratio).

• In 2026: The compensation cap is reduced to 2.5% (25% × 10%), and it will be completely phased out in 2027.

• The policy is retroactive to April 3, and tariffs already paid can be refunded through application.

This move has given domestic automakers a short-term reprieve, but the long-term pressure remains unchanged. The compensation mechanism alleviates about 3-5% of the cost burden for domestic automakers, but the 25% base tariff still exists. Exports of Chinese new energy vehicles to the United States have almost come to a standstill, and even the "roundabout exports" via Mexico and Southeast Asia are still restricted by new U.S. customs regulations.

Moreover, the compensation mechanism contradicts the original intention of the tariffs. While the goal is to protect domestic manufacturing by imposing high import tariffs, the industry still relies on imported parts to maintain production, necessitating compensation for vehicles and essential components.

This policy adjustment is a compromise between protectionism and industrial reality in the United States. It provides short-term relief for automakers but does not change the essence of the trade war. The global new energy vehicle industry chain will further exhibit characteristics of "regionalization + multipolarization." The core contradiction will still be the competition between technological barriers and cost control.

SMM New Energy Industry Research Department

Cong Wang 021-51666838

Xiaodan Yu 021-20707870

Rui Ma 021-51595780

Disheng Feng 021-51666714

Yujun Liu 021-20707895

Yanlin Lü 021-20707875

Zhicheng Zhou 021-51666711

Haohan Zhang 021-51666752

Zihan Wang 021-51666914

Xiaoxuan Ren 021-20707866

Jie Wang 021-51595902

Yang Xu 021-51666760

Boling Chen 021-51666836