President Trump has signed an executive order easing automotive tariffs for a two-year window, allowing automakers to offset up to 3.75% of a vehicle's MSRP in imported parts through April 2026 and 2.5% through April 2027, while leaving the core 25% tariff on roughly 8 million annual vehicle imports intact.

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The relief measures phase out gradually15% of offsets in year one and 10% in year twoand eliminate stacked duties on steel and aluminum, replacing them with a refund system that applies retroactively to early April. Under the new rules, domestic manufacturers can reinvest tariff refunds to localize supply chains without the immediate hit of overlapping levies.

Industry leaders have cautiously applauded the move. A Ford (NYSE:F) spokesperson praised the reprieve for buying time to retool U.S. plants, while General Motors (NYSE:GM), which shelved its annual profit forecast amid tariff uncertainty, described the change as welcome but temporary.

Stellantis (NYSE:STLA) already is rebalancing North America operations to boost local content. Yet with the offsets vanishing after two years, analysts estimate per-vehicle tariff costs will rebound, squeezing margins unless automakers fully onshore production.

Consumers may see sticker prices ease brieflyanalysts project a $1,500-per-vehicle savings this yearbut long-term costs for entry-level models could still rise $2,500$4,000 as global supply challenges persist.

Investors should care because Q2 earnings, due in late July, will reveal how much of that $1,500 reprieve translated into improved margins and whether companies can accelerate domestic content to lock in savings.

The upcoming auto makers' conference in Detroit and Ford's June investor day will be key barometers of how swiftly the industry can pivot supply chains and preserve profitability once the two-year tariff respite expires.