On March 26, 2025, President Trump, pursuant to Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411), as amended, and Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. § 1862) issued a Proclamation titled Adjusting Imports of Automobiles and Automobile Parts Into The United States. The Proclamation is being issued under Section 232 to protect U.S. national security interests and under Section 301, which allows for the United States Trade Representative (USTR) to investigate and respond to unfair trade practices of foreign countries, including allowing for the imposition of tariffs.
The Proclamation states that all imports of articles specified in Annex I,
shall be subject to a 25 percent tariff with respect to goods entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. eastern daylight time on April 3, 2025, for automobiles, and on the date specified in the Federal Register for automobile parts, but no later than May 3, 2025 and shall continue in effect unless such actions are expressly reduced, modified, or terminated.
Commerce, the International Trade Commission, and Customs and Border Protection (“CBP”) are directed to make the necessary modifications to the HTSUS to effectuate the provisions in the Proclamation and provide a notice of such changes in the Federal Register. Furthermore, the Proclamation grants the Secretary of Commerce the authority to issue regulations and guidance consistent with the Proclamation “including to address operational necessity.” It also grants CBP the authority to take “any necessary or appropriate measures to administer the tariffs” imposed by the Proclamation.
Drawback will not be available for the tariffs imposed under the Proclamation.
Automobiles
For automobiles, the Proclamation appears to lay out a two-step test for automobiles to be partially exempt from the new tariffs. First, the automobile must qualify under the USMCA based on the language in subsection (2) which states, “[f]or automobiles that qualify for preferential tariff treatment under the USMCA…” (emphasis added). If the automobile qualifies under the USMCA, the importer then may “submit documentation to the [Commerce] Secretary identifying the amount of U.S. content in each model imported into the United States.” According to the Proclamation, “U.S. content refers to the value of the automobile attributable to parts wholly obtained, produced entirely, or substantially transformed in the United States.”
Pursuant to the Proclamation, CBP will make the determination if an importer has overstated the U.S. content eligible for duty-free treatment and if so, the 25% tariff will apply to the full value of the automobile retroactive to imports from April 3.
Automobile Parts
Annex I has not yet been published, so it is not yet clear which automobile parts will be subject to the 25% tariff. The Annex will likely be published along with the Federal Register Notice. Under the Proclamation, the 25% tariffs,
shall not apply to automobile parts that qualify for preferential treatment under the USMCA until such time that the Secretary, in consultation with CBP, establishes a process to apply the tariff exclusively to the value of the non-U.S. content of such automobile parts and publishes notice in the Federal Register. (emphasis in original).
According to the Proclamation, automobile parts do not encompass knock-down kits or parts compilations. It is not yet clear how Customs will interpret the phrase “parts compilations.”
Provision Allowing For Tariffs On Additional Automobile Parts
The Proclamation allows the Secretary of Commerce to add automobile parts to Annex I at the request of domestic producers of automobiles or automobile parts or at the request of industry associations representing one or more domestic producers,
where the request establishes that imports of additional automobile parts articles have increased in a manner that threatens to impair the national security or otherwise undermines the objectives set forth in any proclamation issued on the basis of the Secretary’s February 17, 2019, report or any additional information submitted to the President under clause (3) of Proclamation 9888 or clause (9) of this proclamation.
The Secretary of Commerce, after receiving such a request, “shall” issue a decision within 60 days of receiving the request.
Additionally, the Proclamation directs the Secretary of Commerce to establish a process, within 90 days of March 26, to add more automobile parts to Annex I.
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