Carmakers in the United States are set to receive a significant boost as the White House prepares to extend a tariff relief program for imported auto parts, a move expected to reduce production costs and support domestic manufacturing, as reported by Bloomberg.

The Commerce Department is expected to announce a five-year continuation of the measure, which was originally scheduled to expire after two years. The policy could be detailed as early as Friday and is expected to coincide with the implementation of new tariffs on imported trucks.

The relief program allows automakers producing finished vehicles domestically to claim a credit of up to 3.75% of the value of American-made cars against a 25% tariff on imported parts. Without the extension, the offset would have gradually declined and then disappeared, increasing cost pressures on U.S. manufacturers.

Ford, General Motors, and other U.S. carmakers lobbied aggressively for the extension, arguing that tariffs on vehicles, steel, aluminum, and components were eroding competitiveness. Ford CEO Jim Farley has highlighted that foreign rivals, particularly Japanese manufacturers like Toyota, benefit from trade deals that reduce their import tariffs from 27.5% to 15%, creating a cost advantage of thousands of dollars per vehicle.

The announcement had an immediate market effect: GM shares rose as much as 3.8%, while Ford and Stellantis NV also saw gains. Analysts note that extending the offset preserves a critical cushion for domestic production and could sustain investment in U.S. vehicle assembly.

President Trump’s separate 25% tariff on fully built vehicles remains in force, although imports from Canada and Mexico that meet North American content requirements are exempted. The combination of extended offsets and ongoing trade carveouts is expected to keep U.S. carmakers more competitive despite elevated global costs.