25% Tariff on Imports of Automobiles and Automobile Parts to Begin April 3rd, 2025
On March 26th, 2025, President Trump signed a proclamation invoking Section 232 to impose a 25% tariff on imports of automobiles and automobile parts. Effective April 3, 2025, a 25% tariff will be imposed on imports of passenger vehicles, including sedans, SUVs, crossovers, minivans, and cargo vans, as well as light trucks. A 25% tariff on automobile parts, such as engines, transmissions, powertrain parts, and electrical components, will take effect on a date to be specified in the Federal Register, but no later than May 3, 2025. The exact list of affected products will be defined in Annex I, which has not yet been published.
The proclamation allows for the potential expansion of these tariffs to additional parts as deemed necessary by the administration. These tariffs will be applied in addition to existing duties, fees, and charges, with no drawback available with respect to the duties imposed by this proclamation. Knock-down kits and parts compilations are exempt from these tariffs.
For automobiles that qualify for preferential treatment under USMCA, importers may submit documentation identifying the U.S. content of each model imported into the United States. U.S. content refers to the value attributable to parts that are wholly obtained, produced, or substantially transformed in the United States. The Secretary may then approve these imports to have the 25% tariff applied exclusively to the value of the non-U.S. content. Thereafter, the Secretary may approve imports of such automobiles to be eligible to apply the ad valorem tariff of 25 percent exclusively to the value of the non-U.S. content of the automobile. The non-U.S. content of the automobile shall be calculated by subtracting the value of the U.S. content in an automobile from the total value of the automobile.
However, if CBP determines that the declared non-U.S. content is inaccurate due to an overstatement of U.S. content, the 25% tariff will apply retroactively from April 3, 2025, and prospectively until the overstatement is corrected. This adjustment will apply to all automobiles of the same model imported by the same importer.
For automobile parts qualifying under the USMCA, the 25% tariff will not apply immediately. Tariffs will only be applied after the Secretary of Commerce, in consultation with CBP, establishes a process to apply tariffs exclusively to non-U.S. content and publishes the relevant notice in the Federal Register.
Automobiles and parts admitted into a U.S. foreign trade zone after the effective date must be classified as “privileged foreign status,” which subjects them to the applicable duty upon entry.
The Secretary of Commerce, in consultation with CBP and USITC, will modify the Harmonized Tariff Schedule of the United States (HTSUS) as needed and publish changes in the Federal Register. The Secretary will also continue monitoring imports and review their impact on national security, recommending further action to the President as necessary.
The full scope of the proclamation can be accessed here: https://www.whitehouse.gov/presidential-actions/2025/03/adjusting-imports-of-automobiles-and-autombile-parts-into-the-united-states/
We will continue to monitor this closely and provide updates as they become available.