Administration officials said the moves on Tuesday would alleviate some duties on foreign parts in cars manufactured in the United States while importers would not have to pay double tariffs on both cars and the materials used to make them.
"The president will sign the executive order on auto tariffs later today, and we will release it, as we always do," White House Press Secretary Karoline Leavitt said during a briefing with Treasury Secretary Scott Bessent about the administration's economic policy agenda.
The administration has yet to formally announce the measures to soften the tariffs but administration officials have confirmed a report in the Wall Street Journal that companies paying car tariffs would no longer be charged other levies, such as on aluminium and steel.
Reimbursements would be given for such tariffs that had already been paid.
"This deal is a major victory for the president's trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing," Commerce Secretary Howard Lutnick said in a statement late on Monday which did not include details.
Trump is travelling to Michigan on Tuesday to commemorate his first 100 days in office, during which the Republican president has upended the global economic order.
Softening the effect of car levies is his administration's latest move to show some flexibility on tariffs which have sown turmoil in financial markets, created uncertainty for businesses and sparked fears of a sharp economic slowdown.
Car makers said earlier on Monday they were expecting Trump to issue relief from the car tariffs ahead of his trip to Michigan, home to the Detroit Three car makers and more than 1000 major car suppliers.
General Motors, CEO Mary Barra and Ford CEO Jim Farley praised the planned changes.
"We believe the president's leadership is helping level the playing field for companies like GM and allowing us to invest even more in the US economy," Barra said.
Farley said the changes "will help mitigate the impact of tariffs on automakers, suppliers and consumers".
But the uncertainty unleashed across the car sector by Trump's tariffs was still on full display on Tuesday when GM pulled its annual forecast even as it reported strong quarterly sales and profit.
In an unusual move, the car maker also opted to delay a scheduled conference call with analysts until later in the week, after the details of tariff changes were known.
Last week, a coalition of US car industry groups urged Trump not to impose 25 per cent tariffs on imported car parts, warning they would cut vehicle sales and raise prices.
Trump had said earlier he planned to impose tariffs of 25 per cent on car parts no later than May 3.
"Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable," the industry groups said in the letter.
The letter from the groups representing GM, Toyota Motor, Volkswagen, Hyundai and others, was sent to US Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent and Commerce's Lutnick.
"Most auto suppliers are not capitalised for an abrupt tariff-induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy," the letter added, noting "it only takes the failure of one supplier to lead to a shutdown of an automaker's production line".
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