U.S. Tariffs: Automobiles & Automobile Parts into the U.S.
UPDATED: April 3, 2025
ADDED: Link to Federal Register Document: Adjusting Imports of Automobiles and Automobile Parts Into the United States
To view the Federal Register document, please clink on the link below:
Adjusting Imports of Automobiles and Automobile Parts Into the United States
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On March 26, 2025, The President of the United States issued a Proclamation and Fact Sheet with respect to the Automotive Industry. Below is a summary of the Proclamation & Fact Sheet.
To review the full Proclamation and & Fact Sheet, please click on the links below:
ADJUSTING IMPORTS OF AUTOMOBILES AND AUTOMOBILE PARTS INTO THE UNITED STATES
Proclamation: Adjusting Imports of Automobiles & Auto Parts Into the United States
Background
- National security concerns regarding automobile imports have escalated since February 17, 2019.
- The COVID-19 pandemic revealed vulnerabilities in global supply chains, affecting the domestic automotive industry.
- American manufacturers face challenges such as material shortages, labor strikes, and competition from foreign industries benefiting from unfair subsidies.
- Currently, only 50% of vehicles sold in the U.S. are domestically manufactured, threatening the industrial base.
- Previous trade agreements, including the USMCA, have not sufficiently mitigated the national security risks posed by imports.
- The Secretary recommends imposing tariffs on automobile imports to safeguard national security.
- New processes will be established to identify and impose tariffs on additional automobile parts as necessary.
Proclamation Clause #1
- Effective Date: A 25% tariff will be imposed on specified imports starting April 3, 2025, for automobiles, and on the date specified in the Federal Register for automobile parts, no later than May 3, 2025.
- Scope of Tariff: This tariff applies to all articles listed in Annex I of the proclamation or any subsequent annex, as mentioned in the Federal Register.
- Additional Charges: The 25% tariff is in addition to other duties, fees, and charges applicable to imported automobiles and certain automobile parts.
- Duration: The tariff will remain in effect unless explicitly reduced, modified, or terminated.
Proclamation Clause #2
- Preferential Tariff Treatment: Automobiles qualifying under the USMCA can benefit from preferential tariff treatment.
- Documentation Submission: Importers must submit documentation to the Secretary detailing the amount of U.S. content in each imported automobile model.
- Definition of U.S. Content: “U.S. content” is defined as the value of the automobile that comes from parts that are wholly obtained, produced entirely, or substantially transformed in the United States.
- Ad Valorem Tariff Application: Once the U.S. content is identified, the Secretary can approve imports to apply a 25% ad valorem tariff only to the value of the non-U.S. content.
- Calculation of Non-U.S. Content: The non-U.S. content is determined by subtracting the U.S. content value from the total value of the automobile.
Proclamation Clause #3
- 25% Tariff on Automobiles: If U.S. Customs and Border Protection (CBP) finds that the declared value of non-U.S. content in an automobile is overstated due to incorrect U.S. content valuation, a 25% tariff will be applied to the full value of the automobile.
- Retroactive Application: This tariff will not only apply going forward but will also be retroactive. It will take effect from April 3, 2025, back to the date of the inaccurate declaration.
- Prospective Application: The tariff will continue to apply from the date of the inaccurate overstatement until the importer corrects the declaration, as verified by CBP.
- Impact on Other Models: The same tariff will apply to all automobiles of the same model imported by the same importer during this timeframe.
- Exclusion of Other Fees: This clause does not affect any other applicable fees or penalties that may apply to the importer.
Proclamation Clause #4
- The ad valorem tariff of 25% will not apply to automobile parts eligible for preferential treatment under the USMCA.
- This exemption remains until the Secretary, in consultation with CBP, establishes a process to apply the tariff only to the value of the non-U.S. content of these parts.
- A formal notice regarding this process will be published in the Federal Register.
Proclamation Clause #5
- The proclamation clarifies that clause (4) does not apply to automobile knock-down kits or parts compilations.
- It specifies that clause (4) is relevant only to individual automobile parts as defined by Annex I of the proclamation.
- This distinction ensures that only specific components meet the requirements outlined in clause (4).
- The aim is to avoid any confusion regarding which parts are included or excluded under this proclamation.
Proclamation Clause #6
- The Secretary is responsible for determining necessary modifications to the HTSUS (Harmonized Tariff Schedule of the United States).
- This determination is made in consultation with the United States International Trade Commission and Customs and Border Protection (CBP).
- Modifications to the HTSUS will be enacted through a notice published in the Federal Register.
- The process aims to ensure that the proclamation is effectively implemented, aligning with trade regulations.
Proclamation Clause #7
- Establishment of Process: Within 90 days of the proclamation, the Secretary will create a process to include additional automobile parts articles in the existing tariffs.
- Request for Inclusion: Domestic producers or industry associations can request the inclusion of additional automobile parts if they demonstrate that imports threaten national security.
- Consultation Requirement: Upon receiving a request, the Secretary will consult with the United States International Trade Commission and Customs and Border Protection (CBP) before making a determination.
- Timeline for Determination: The Secretary must issue a determination within 60 days of receiving a request.
- Notification: Any articles determined to be included in the tariffs will be effective from 12:01 a.m. eastern daylight time the day after a notice is published in the Federal Register.
- Publication Deadline: The notice must be published no later than 14 days after the Secretary’s determination.
Proclamation Clause #8
- Any automobile or automobile part, except those with “domestic status” as per 19 CFR 146.43, is subject to a duty under the current proclamation.
- These items must be admitted into a United States foreign trade zone on or after the proclamation’s effective date.
- Admission must comply with clause (1) of the proclamation, requiring “privileged foreign status” as defined in 19 CFR 146.41.
- Upon entry for consumption, these items will incur any applicable ad valorem rates of duty based on their classification under the relevant HTSUS subheading.
Proclamation Clause #9
- The Secretary is tasked with ongoing monitoring of automobile and parts imports.
- Regular consultations with senior executive branch officials will inform the review of these imports concerning national security.
- The Secretary is responsible for notifying the President about any situations that may warrant further action under section 232.
- Additionally, the Secretary must inform the President if the increased duty rate in the proclamation is deemed unnecessary.
Proclamation Clause #10
No drawback shall be available with respect to the duties imposed pursuant to this proclamation.
Proclamation Clause #11
- Key Authority: The Secretary has the power to issue regulations and guidance.
- Purpose: This authority is exercised to address operational necessity.
- Context: The actions taken are consistent with the proclamation in question.
- Implication: These regulations and guidance are essential for effective management and response to operational demands.
Proclamation Clause #12
CBP may take any necessary or appropriate measures to administer the tariffs imposed by this proclamation.
Proclamation Clause #13
- Main Conclusion: The current proclamation overrides any previous proclamations and executive orders that conflict with it.
- Superseding Authority: This proclamation has the authority to nullify inconsistent directives to ensure clarity and uniformity in governance.
- Implications: The actions taken in this proclamation are now the prevailing rules, which may affect how past orders are interpreted and enforced.
- Importance of Compliance: All relevant parties must adhere to the new guidelines set forth in this proclamation, as they take precedence over earlier instructions.
Fact Sheet: President Donald J. Trump Adjusts Imports of Automobiles and Automobile Parts into the United States
President Trump’s Initiative:
Taking action to protect the U.S. automobile industry, crucial for national security.
Tariff Implementation:
A 25% tariff will be applied to imported:
- Passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans)
- Light trucks
- Key automobile parts (engines, transmissions, powertrain parts, electrical components)
USMCA Compliance:
- Importers under the United States-Mexico-Canada Agreement can certify their U.S. content.
- The 25% tariff will only apply to the value of non-U.S. content.
Tariff-Free Parts:
USMCA-compliant automobile parts will remain tariff-free until a process is established by the Secretary of Commerce and U.S. Customs and Border Protection (CBP) for non-U.S. content.
Legal Authority:
The President is utilizing Section 232 of the Trade Expansion Act of 1962, which allows adjustments to imports that threaten national security.
Goal:
To end unfair trade practices that jeopardize the U.S. national security and maintain a resilient domestic industrial base.
- The COVID-19 pandemic has revealed vulnerabilities in global supply chains, threatening the resilience of the U.S. industrial base.
- New tariffs on automobile imports aim to protect national security and bolster the domestic automotive sector.
- In 2024, 50% of vehicles purchased in the U.S. were imports, with only 25% of vehicle content classified as “Made in America.”
- The U.S. trade deficit in automobile parts reached $93.5 billion in 2024, highlighting the need for action.
- The automotive industry employs approximately one million workers, but jobs in automotive parts manufacturing have fallen by 34% since 2000.
- American R&D in the automotive sector is lagging, constituting only 16% of global spending compared to the EU’s 53%.
- Studies show that tariffs can reduce threats to national security and stimulate U.S. production, with a 2024 study indicating that President Trumpโs tariffs strengthened the economy and encouraged reshoring.
- A 2023 report found that tariffs on over $300 billion of U.S. imports effectively reduced imports from China with minimal impact on prices.
- Economic analyses suggest that a 10% global tariff could create 2.8 million jobs and increase household incomes by 5.7%.
- Former Treasury Secretary Janet Yellen noted that tariffs do not significantly raise consumer prices, supporting their use as a strategic economic tool.
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