On March 26, 2025, President Trump issued a Proclamation announcing the imposition of a 25% tariff on imported automobiles set to become effective on April 3, 2025, and certain automotive parts, set to become effective no later than May 3, 2025. These automotive tariffs will follow what the President has dubbed “Liberation Day” (i.e., April 2, 2025), the day new reciprocal and sectoral tariffs are planned to go into effect on a wide range of imports from various countries.[1]
Scope of the Tariffs
The Proclamation states that the tariffs will apply to certain automobiles and automotive parts that will be identified in a subsequently published “Annex I” to the Proclamation. The accompanying White House Fact Sheet provided additional details on the types of vehicles and automotive parts to be targeted by the additional 25% tariff.
- The tariffs going into effect on April 3, 2025, will cover all imported passenger vehicles and light trucks including:
- Sedans;
- SUVs;
- Crossovers; and
- Minivans and cargo vans.
- Tariffs going into effect no later than May 3, 2025, will cover “key automobile parts” such as:
- Engines;
- Transmissions;
- Powertrain parts; and
- Electrical components.
Notably, the Secretary of Commerce is directed to establish a process for including additional automobile parts under the scope of the tariffs within 90 days of the Proclamation. The Secretary is also directed to ensure that this process provides an avenue for the inclusion of additional automobile parts based on requests made by domestic industry concerning certain imports that have increased to levels that pose a threat to U.S. national security. As such, importers should monitor carefully for possible expansions to the scope of the tariffs even after the initial Annex I list of products is published in the coming days.
USMCA Exclusions
Partial relief from the tariffs may be available to importers of automobiles and automobile parts that qualify for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”). For automobiles, the Proclamation provides that the tariffs will not apply to the “U.S. content” or "value of the automobile attributable to parts wholly obtained, produced entirely, or substantially transformed in the United States." Importantly, in order for the tariff exemption to be applied to the U.S. content of an automobile the automobile itself must (1) qualify for preferential tariff treatment under the USMCA and (2) the importer must submit “documentation” to the Secretary of Commerce identifying the U.S. content so that the Secretary may approve application of the tariffs “exclusively to the value of the non-U.S. content of the automobile.”
For automobile parts, the 25% tariff will not apply to items that qualify for preferential tariff treatment under the USMCA until a process is established “to apply the tariffs exclusively to the value of the non-U.S. content of such automobile parts” and a related notice is published in the Federal Register.
Trade Compliance Risks and Obligations
Importers of targeted automobiles and automobile parts should act promptly to assess their compliance posture and ensure readiness for enhanced enforcement. This includes a review of compliance with USMCA provisions to determine eligibility for preferential tariff treatment. Determining whether goods may qualify for preferential tariff treatment under the USMCA can be a rigorous process requiring in-depth product reviews and meticulous documentation. As such, importers should take action now to review their qualifications for potential preferential treatment under the USMCA to help prepare for potentially applicable exclusions from the additional 25% tariffs announced by the Proclamation. In addition, importers should review their compliance with other Customs obligations, such as proper classification of merchandise under the Harmonized Tariff Schedule and accurate determination of country of origin, as the imposition of additional tariffs are likely to increase scrutiny of import documentation and overall enforcement of Customs laws and regulations by U.S. Customs and Border Protection.
[1] See our prior updates on tariff news here.
