DETROIT—Former President Donald Trump has announced new tax breaks aimed at revitalizing auto manufacturing, including new research and development credits, expanded equipment cost claims for small businesses and consumer tax deductions for auto loan interest, in a presidential campaign promise.
The benefits add to Trump’s previous promises to manufacturers, including a lower corporate tax rate for U.S.-based manufacturers, higher tariffs on imported cars and increased domestic energy production, which are intended to lure manufacturers to U.S. soil.
The announcement was made at a gathering of about 500 business leaders at the Detroit Economic Club on Oct. 10.
The intense focus on domestic manufacturing and auto production shows the importance of Michigan’s 15 electoral votes to the Trump campaign in the 2024 presidential race.
Trump trails Democratic presidential nominee Vice President Kamala Harris by just 1 percentage point in an average of recent polls in Michigan, one of seven swing states likely to decide the election.
The Republican candidate said the raft of new tax breaks for automakers would encourage the construction of large, modern auto plants and help the United States become an industrial superpower.
These incentives include extensive tax credits for research and development, a 100 percent tax deduction for heavy equipment in the first year after purchase and full reimbursement of expenses for new investments in production.
“I want the triumph of the American auto industry to be my greatest legacy,” Trump said.
For small businesses, Trump announced a doubling of the amount they can deduct for equipment purchases from $500,000 to $1 million.
For consumers, Trump announced that interest on auto loans would be fully tax deductible, similar to interest on mortgage loans.
Trump had previously announced that he would incentivize manufacturers to produce goods in the United States by offering a 15 percent corporate tax rate for companies that make their products in the United States, down from the current rate of 21 percent, and imposing a 100 percent tariff on imported cars.
The former president has also promised to reduce the price of gasoline by 50 percent within a year of taking office by increasing domestic oil production and doubling electricity production, which he said would further attract manufacturers.
Vice President Kamala Harris has also hoodwinked auto workers and manufacturers.
“We’ve brought manufacturing back to America, creating 730,000 manufacturing jobs,” Harris told rally attendees in Flint, Michigan, on Oct. 5.
“We’ve announced the opening of more than 20 new auto plants in the United States, and we’ve done that by investing in American manufacturing and American workers.”
Harris said she would continue to invest in communities like Flint, a city with a long history of auto manufacturing, but didn’t offer specifics.
A key element of that protection is the imposition of higher tariffs, a measure Harris has repeatedly called a tax on the American people.
“I want tariffs, but there has to be reciprocity,” Trump said, meaning that the United States and other countries would trade on an equal footing.
“Without that tariff, every one of the Detroit Big Three could be bankrupt right now,” Trump said on Oct. 3.
Regarding Chinese automakers setting up factories in Mexico in an effort to sell electric vehicles in the United States, Trump said, “I will impose whatever tariffs are necessary … 100 percent, 200 percent, whatever it takes.”
The former president also announced that he would renegotiate the U.S.-Mexico-Canada Agreement to correct trade imbalances with those countries.
The U.S. trade deficit with Mexico was $130.5 billion in 2022, up 23.7 percent from 2021, according to the Office of the U.S. Trade Representative.
The trade deficit with China was $382.3 billion in 2022, up 8.3 percent from 2021.
Race status
Trump and Harris are tied in the most recent poll of Michigan voters, though Harris shows a 1-point lead in an average of recent polls compiled by FiveThirtyEight. Trump won the state by fewer than 10,000 votes in 2016. Then-presidential candidate Joe Biden won Michigan by about 154,000 votes in 2020.