New 25% Auto Tariffs Announced Under Section 232: What Importers and Auto Suppliers Need to Know

The Proclamation revives the findings made by a US Department of Commerce report issued in 2019 during Trump’s first term on the national security threat posed by foreign automotive imports as the basis for this action. These automotive tariffs, which are in addition to any existing tariffs including the recent tariffs issued under the International Emergency Economics Powers Act and the Section 232 steel and aluminum tariffs, are expected to significantly impact the US automotive supply, including manufacturers, suppliers, and importers of vehicles and parts alike.

While the precise scope of the tariffs is still being defined, including the awaited release of Annex I and implementation details, businesses in the automotive sector should begin assessing how this action could affect their supply chains, sourcing strategies, and compliance obligations.

The Auto Tariffs: What You Need to Know

Below, we answer key questions about the new tariffs and their expected implications.

Q: What is the legal basis for these tariffs?

A: The tariffs are authorized under Section 232 of the Trade Expansion Act of 1962, which allows the president to adjust imports that threaten national security. The Proclamation cites the 2019 Commerce Department report finding that foreign imports of automobiles and parts pose such a threat. President Trump previously concurred with that report’s findings in Proclamation 9888 (May 17, 2019).

Q: What products are covered by the 25% tariff?

A: The specific list of vehicles and automotive parts, and their corresponding Harmonized Tariff Schedule (HTS) codes, that are covered by these tariffs has not yet been released and will appear in Annex I of the Federal Register notice.

Based on the connection to Proclamation 9888 and the underlying investigatory findings from 2019, we expect the products to include sedans, SUVs, crossovers, minivans, cargo vans, light trucks, engines, transmissions, powertrain parts, and electrical components.

Until Annex I is published, businesses may look to the HTS codes listed in the 2019 Commerce Department report finding as a potential reference point on which products may be subject to these tariffs, though we caution the final list of HTS codes could change.

Q: When do the tariffs go into effect?

A: The effective dates differ depending on whether the import involves a vehicle or a part.

• Vehicles: April 3 (12:01 AM EDT).
• Automobile Parts: No later than May 3 (date to be specified in a future Federal Register notice).

No termination date has been set.

Q: Is there an exemption for United States-Mexico-Canada Agreement (USMCA)-compliant vehicles or parts?

A: Yes, but with limitations.

Vehicles

Importers of USMCA-eligible vehicles may submit documentation to Commerce detailing the US content of each model based on rules that include substantial transformation. If approved, the 25% tariff will apply only to the non-US content of the vehicle. However, note that if the US Customs and Border Protection (CBP) later determines that US content was overstated, the full 25% tariff will apply retroactively and prospectively to all imports of that model by the same importer.

Auto Parts

Parts that qualify for preferential treatment under USMCA are initially exempt until Commerce and CBP establish a process to calculate tariffs based only on non-US content. Once that process is in place, the tariff will apply to the value of non-US content in the part.

One important caveat to note is that this new “US content” determination uses a substantial transformation test — diverging from the USMCA’s regional value content or tariff shift approach. Importers will need to carefully analyze how US content is calculated for each vehicle or part. We expect that automakers are likely to rely on its suppliers for these determinations.

Q: What about knock-down kits or parts compilations?

A: The exemptions applicable to automotive parts will not be available for automobile knock-down kits or parts compilations, even if the finished product may be eligible under USMCA.

Q: Will duty drawback be allowed?

A: No. Duty drawback will not be available for these tariffs.

Q: How do these tariffs impact admission into US Foreign Trade Zones (FTZs)?

A: Goods subject to these tariffs that are admitted into US FTZs on or after their corresponding effective date must be entered under privileged foreign status per 19 CFR 146.41, except those eligible for admission under domestic status per 19 CFR 146.43.

Q: How do these tariffs relate to other existing tariffs?

A: These tariffs are in addition to any other duties, tariffs, or trade remedy measures (e.g., Section 301, Section 201). Importers should consider the cumulative impact on total landed cost.

Q: Can additional parts be added to the tariff list?

A: Yes. The Proclamation directs Commerce to establish, within 90 days, a process for adding more auto parts to the tariff list. Requests can be submitted by US producers or industry associations that can demonstrate how additional imports threaten national security.

Q: What is the justification for this action?

A: Based on the White House Fact Sheet, the Trump Administration believes that imposing these tariffs is necessary to strengthen the US domestic industrial base and to protect US national security. The Administration provided the following reasons for this position:

• Excessive imports have undermined the US automobile industry.
• The COVID-19 pandemic exposed vulnerabilities in global supply chains, highlighting the need for a resilient domestic industrial base.
• Despite existing legislation and trade agreements (e.g., USMCA and US-Korea Free Trade Agreement), the threats posed by imports have not been sufficiently mitigated.
• Employment in automotive parts manufacturing has decreased significantly over the last two decades, while the trade deficit in automobile parts reached $93.5 billion in 2024.

What Remains Unknown

A number of critical questions remain unanswered, including:

• Scope of Coverage: Which HTS codes will appear in Annex I? Will heavy-duty or commercial vehicles (or parts thereof) be included?
• Knock-Down Kit Carve-Out: How will this exception be interpreted or enforced? Note that knock-down kits generally use the “unassembled” tariff classification principle to classify the kit in the same HTS code as a complete vehicle.
• US Content Certification: What documentation must be submitted to Commerce to take advantage of the US content exemption?
• Commerce Review Process: What criteria will Commerce use to approve or deny partial tariff applications based on US content?
• CBP Compliance and Reporting: How will importers report non-US content at entry? What role will CBP audits and verifications play?

These unknowns introduce compliance and operational risk for importers. Of particular note is the reliance on the “substantial transformation” test for determining US content, which may result in diverging interpretations across agencies and additional layers of complexity for companies that are already certified under USMCA.

What to Expect Next

We are awaiting the release of:

• Annex I with specific HTS codes.
• Federal Register notices establishing procedures and timelines for tariff application and exemption requests.

Companies with international supply chains — especially those with operations in Canada, Mexico, the European Union, or Asia — should begin evaluating whether their vehicles and parts contain sufficient US content to qualify for partial exemptions. In parallel, businesses should prepare to comply with overlapping tariff regimes and establish internal protocols for content documentation and CBP reporting.

We will continue to monitor developments closely and provide updates once Annex I and implementing notices are published.