Five Hot (Sizzling) Button Trade Issues for the Electric Mobility Industry in 2025

Other pressure points loom, chief among them the Trump Administration’s aim to eliminate the previous government’s electric vehicle mandate.

It should be noted, however, that rumblings of darker clouds began within the previous Administration, with former President Biden announcing US Section 301 tariffs on imports from China, an action which included electric vehicles but also batteries, battery components, and critical minerals. Beyond tariff imposition, the Trump Administration appears to be pursuing policies at odds with the prioritizing the development of the industry as compared the Biden Administration’s previous actions.

With this background in mind, this preview aims to provide clear-eyed thought for companies that are well aware of the political realities of our times but face production cost increases and fewer supply chain options. The pace of growth may not be what was anticipated last year, but the industry is not at a standstill.

January 2025 started out with a bang.

That bang was heard in capitols around the world, starting with President Trump’s Inauguration Day speech in which he announced his Administration’s America First Trade Policy. This quote from the White House was prescient, as it made clear early on President Trump’s linkage of a robust use of tariff application and national security goals. “My Administration treated trade policy as a critical component to national security and reduced our Nation’s dependence on other countries to meet our key security needs.”

In rapid succession, the new president moved quickly to release a trove of executive orders (EOs) outlining how new tariffs would be applied and on which products from which trading partners. We have tracked these orders and their various tariff applications for our readers, and they can be found here.

Three Overarching Perspectives

1. A prevailing underpinning in these EOs is the International Economic Emergency Powers Act (IEEPA) that has been used to impose tariffs on all Chinese, Mexican, and Canadian products. Global trade rules provide that trading partners maintain low-tariff commitments, but some exceptions apply for national security and national emergency imperatives. The IEEPA gives the White House that authority and is attractive to the Trump Administration because the statute does not impose time-consuming procedures as a pre-condition. Moreover, the Trump Administration has expanded tariffs on many steel and aluminum products relying on investigations conducted and findings made in 2018. With these EOs, President Trump puts the trade community and global supply chains on a new track.
2. Additionally, President Trump’s tariff announcements argue that US trading partners continue to impose “unfair” tariff barriers, including non-tariff costs such as import fees and Value Added Tax (VAT) costs. This is an important consideration when and if the White House makes good on its pledge for “retaliatory” tariffs that are looming to start in early April.
3. US tariff investigations and applications of new tariffs have historically been pursued with a public transparency process. EOs are announced, investigations are launched, and notices from the relevant federal agency are published in the US Federal Register. This process offers the public a view into the Administration’s purpose, product, or industry scope, and the opportunity to comment (on the record). This regulatory procedure often takes quite some time, but is arguably meant to do just that. At the time of this writing, it is unclear whether or how this process will be modified, given the President Trump’s oft spoken intent for expediency to put these tariffs in place.

Our goal with this alert is to look ahead, past the headlines, beyond the initial EOs, and widen the lens.

Our Five Hot Button Issues

What’s Happened So Far

Canada, Mexico, and China

A 25% tariff on imports from Canada and Mexico announced on February 1, was to be imposed immediately but quickly stayed after escalated negotiations with Mexico and Canada that led to a pause in the tariff implementation until March 4. The additional duties of 10% for imports from China began on February 4 and was increased to 20% effective on March 4. These tariff actions cited President Trump’s authority under IEEPA. All three countries have announced retaliatory tariffs. Details and timelines on these actions can be found on our “Trump Tariffs 2.0: The Tariff Tracker” page.

Waiting in the Wings

When Will the Pause on Mexican and Canadian Tariffs End? 

The EOs authorizing the pause to do not state an end date, and President Trump would need to amend the current EOs to commence the tariffs again. President Trump has made statements stating that tariffs could resume on April 2. While this date has not been confirmed, we believe that tariffs will be resurrected at some point.

US Reciprocal Tariffs

With new and unprecedented reciprocal tariffs looming to start in early April, a look back at the President’s February announcement that trigged these actions: “(O)n Trade, I have decided, for purposes of Fairness, that I will charge a RECIPROCAL Tariff meaning, whatever Countries charge the United States of America, we will charge them.” He added that “for purposes of this United States Policy, we will consider Countries that use the VAT System, which is far more punitive than a Tariff, to be similar to that of a Tariff.”

Federal Agency Recommendations to the White House

Less reported in the media is the January 20 release of the president’s instructions to a host of federal agencies to investigate unfair trade practices by US trading partners and to report back to the White House by April. Those recommendations have now been linked to reciprocal tariffs and will no doubt support the president’s broad use of tariffs but also “global supplemental tariff or other policies, to remedy such (trade) deficits.” Other reports will include the possibility of new antidumping and countervailing duties (AD/CVD) investigations on certain industries or products and the establishment of a new agency – the External Revenue Service (ERS), “to collect tariffs, duties, and other foreign trade-related revenues.” We anticipate that these reports will be made public, but readers will want to watch for opportunities of public consultations, usually in the form of Federal Register notices. These will be monitored by our team and posted on our Tariff Tracker page.

1. Steel and Aluminum Tariffs

What’s Happened So Far

US trade investigations on these two industry sectors are not new. The US Department of Commerce has concluded in past Administrations that additional tariffs are applicable and that the authority under the Section 232 of the Trade Expansion Act of 1962 should be used against imports of steel and aluminum which “threaten to impair the national security” of the United States.

On February 10, President Trump issued an executive order adjusting the imports of steel and aluminum into the United States, which expanded and raised the Section 232 tariffs on steel and aluminum products and derivatives for all countries to 25% as of March 12,(except that Russian aluminum products and derivates would remain at 200%), rescinding any country exemptions and the exclusion process provided by previous administrations (with very limited short term exceptions to previously granted product exclusion that had yet to expire).

Waiting in the Wings

The guidance on the Section 232 tariffs for the steel and aluminum products that has been issued since the EOs were issued has left many open questions. These issues include:

• How should the steel and aluminum content of the new derivatives outside of Harmonized Tariff Schedule (HTS) Ch. 72 and 76 be calculated and reported to US Customs and Border Protection (CBP) upon entry?
• There are complex filing requirements for providing the country of melt and pour with respect to steel products and derivatives, as well as the country of smelt and cast for aluminum products and derivatives.
• These issues are further exacerbated by the fact that certain products that have a classification within the additional derivative list do not contain steel or aluminum and thus are not subject to the tariffs, but programming issues when entering the good are incorrectly imposing the tariffs on such goods.
• Will the post entry correction processes include post summary correction, protests, or reconciliation?
• EO also tells us that by May 11, the US Secretary of Commerce is to establish a process for interested parties to request an expansion of the derivative product list.

While we expect CBP and Commerce to issue additional guidance, companies will need to consider solutions for these problems in the interim. The AFS team can help companies navigate through these complex import procedures so that business operations can continue.

2. The Fate of the USMCA

What’s Happened So Far

The six-year “review” of the United States–Mexico–Canada Agreement (USMCA) is slated for July 2026. When negotiators from Ottawa, Washington, DC, and Mexico City meet, they will determine whether one or more parties have expressed their intent to withdraw from the USMCA and if so, when or if the USMCA expires.

The USMCA six-year review provision is more of an evaluation of the past six years rather than a specified full-blown re-negotiation. But the text is vague, leaving open the very real possibility that in July 2026, “everything and all things are on the table.”

Waiting in the Wings

Ottawa has already formally launched industry consultation procedures to prepare its negotiators for 2026. Washington, DC, has not yet done so. However President Trump’s America First Trade Policy issued on day one of his tenure noted the Administration’s intent to pursue industry consultations leading up to the negotiations.

Our expectation is that a Federal Register notice will appear by the fall of 2025 in which the public will be invited to provide written comments and to request participation in a public hearing. By January 2026, the US Trade Representative or the Secretary of Commerce (who has been given a uniquely prominent role in US trade policy in this Administration) will send a formal report to key Congressional committees, outlining the key issues identified through the public and inter-agency comment period.

For the vehicle and vehicle parts industries, these timelines are important in that the current USMCA rules of origin can be expected to change, and change significantly, to reflect Washington, DC’s, 2025 trove of EOs and corresponding reports from different US agency heads to the president. Also to be seen is how the Trump Administration will pursue the dispute over the USMCA’s definition of “core parts” and changes to the pact’s regional value content rules on batteries and other electric vehicle (EV) assemblies and components.

3. The 2022 IRA and US Production Grants

What’s Happened So Far

In our alert, Washington’s Focus on the Electric Vehicle Supply Chain in 2023, we shared with readers that the IRA, perhaps the most significant climate legislation from Washington, DC, in history, made available billions of dollars in tax credits and other incentives to spur US domestic manufacturing of EVs.

Since taking office, President Trump has repeatedly expressed his support for fossil fuels as a key energy provider for the country. Various tax credits and bonuses for the electric mobility sector authorized by the Executive and Legislative Branches in 2022 were soon under the microscope in 2025 with a vaguely worded memo from the Office of Management and Budget (OMB) squashing the continuation of US federal grants and other monies. A federal court order has since stayed that memo’s enforcement.

A White House spokesperson had this to say: “The Executive Orders issued by the President on funding reviews remain in full force and effect and will be rigorously implemented by all agencies and departments,” White House press secretary Karoline Leavitt said, blaming the confusion on the courts and news outlets, not the administration. “This action should effectively end the court case and allow the government to focus on enforcing the President’s orders on controlling federal spending.”

Waiting in the Wings

A Temporary Restraining Order (TRO) handed down on February 10 instructing the White House to resume federal funding assistance is in place until a date for a preliminary injunction has been set.

Widespread confusion in response to the late-January OMB memo and the court’s TRO will add to uncertainties for the electric mobility sector. Adding to increased tariff costs for supplies by taking away long-term financial commitments will surely keep executives sleepless. What to watch will be congressional action vis-a-vis the federal funding assistance as that branch of government takes very seriously their “power of the purse.”

In this previously published Update Alert, we reported on a subsequent guidance FAQ issued on January 28 by the OMB, which clarified that “the pause does not apply across-the-board” and is instead “expressly limited to programs, projects, and activities implicated by the president’s EOs, such as ending diversity, equity, and inclusion, the green new deal, and funding nongovernmental organizations that undermine the national interest.” The OMB memo states that the purpose of the pause is to provide the Trump Administration with time to review federal programs and determine use of federal funds consistent with the Administration’s priorities. We do not expect that a funding pause would apply to IRA tax credits, including the consumer tax credit for electric vehicles under Section 30D.

4. Reciprocal Tariffs and the VAT

What’s Happened So Far

President Trump’s tariff announcements in early February have targeted specific US trading partners. On February 13, the White House dropped yet another tariff announcement, this one applicable to all trading partners. The Fact Sheet: “Fair and Reciprocal Plan” on Trade provides insight into a possible next phase of US tariff impositions, one that offsets the benefits US trading partners give their exporters through the use of consumption taxes, such as the widely-applied VAT. Many statements by the president have been made in the recent days and weeks that reciprocal tariffs are coming.

While the White House has yet to offer details or any further official statements on this plan, it is noteworthy that this plan differs from other tariff announcements that have identified specific imports from specific US trading partners. This “plan” applies varying tariffs multilaterally and on a global platform and consider the use of various legal authorities that are not specifically limited.

Waiting in the Wings

The White House efforts to reduce US export barriers to include foreign tax systems may not be a novel approach but in light of the broader Trump tariff plans, the anticipated publication of an official EO and/or Federal Register notice will be critical to watch. Not only will such notice provide rates of reciprocal duties but on which specific imports and from which countries of export to the United States. We expect the first set of official updates on this to come out during the first week in April.

The Essential Takeaway – What We Know Now and Where to Start

This 2025 preview should not be read as predictive of future events in the trade policy arena. It is impossible (and irresponsible) to state with any assurances that any one of the tariff moves discussed above will in fact be applied in the method proposed. That said, company officials and their lawyers are compelled for many diligence reasons to calculate their revenue risk exposure and build a risk strategy to mitigate that exposure.

By most accounts, the Trump Administration will move forward with many of these tariff increases, and these will no doubt impact the EV and EV parts industries.

Waiting for these tariffs to actually drop should not be a part of that risk strategy. Instead, as our alerts have often recommended, companies may wish to start with the basics of US tariff rules of calculations. While not typically on the to-do list for most c-suite executives, taking stock of their own product line and supply chain at a transactional level and taking a deep dive review into how their imported inputs have been classified, valued, and assessed by US trade agencies is now a must.

The reason would seem obvious, but we would remind readers that how US agencies apply tariffs on an import is based on the importer’s assessment and the importer’s transmission of classification, origin, and valuation data.

If that data is outdated, or if it has been based on a misunderstanding of US import rules, such as a too-high valuation or not having considered value-reduction opportunities, the tariff exposure is higher than it ought to be. This includes how a company has reported their all-important tariff (product) classifications, which triggers many tariff applications and rates, various country of origin rules that need to be applied for declaring the origin and determining if certain special tariffs apply, the customs value declarations, and the multiplier that determines the amount of duties paid as a result of tariffs.

Launching this internal review now, with top-tier counsel and project management, will bring more certainty for companies pondering when and how future tariff announcements will apply to their production and investment decisions.

A note from the editors: Our annual previews have become a “must read” for many executives, in-house lawyers, and compliance personnel in the vehicle and vehicle parts sectors. Our team is appreciative of the supportive comments we have received over the years, and we look forward to hearing from you throughout 2025.