Tariff Relief Tied to U.S. Auto Assembly Under Revised Section 232
Trade Update • April 30, 2025
New Policy Offers Offset Credits for Automakers Building and Selling in the U.S.
resident Trump has amended the U.S. tariff on auto imports, offering relief to manufacturers that increase vehicle assembly and sales within the United States — part of a broader national security strategy under Section 232.
Amendments to Adjusting Imports of Automobiles and Automobile Parts into the United States
U.S.-Based Auto Assembly/Sales
In an April 29 proclamation, President Trump authorized a modified tariff system that ties relief to domestic vehicle production and sales. Automakers that build and sell vehicles in the United States will be eligible for tariff offset credits that reduce their duties on imported parts.
According to a senior Commerce Department official, the credits are based on the Manufacturer’s Suggested Retail Price (MSRP) of U.S.-assembled vehicles sold domestically, with effective April 3, 2025, with auto parts effective May 3, 2025. Companies will report their sales volumes and MSRP values to the Commerce Department, which will then instruct U.S.
Offset Amounts and Eligibility
Tariff offset include:
From April 3, 2025, through April 30, 2026, automakers can receive a credit equal to 3.75% of the MSRP value of all U.S.-assembled vehicles.
From May 1, 2026, through April 30, 2027, the credit drops to 2.5% of the MSRP for those same qualifying vehicles.
These percentages reflect the effective tariff burden when a 25% duty is applied to parts making up 15% (in Year 1) and 10% (in Year 2) of a car’s value. Credits can only offset tariff liabilities tied to the manufacturer’s own auto parts imports and cannot be transferred to other duties or overclaimed.
If the offset exceeds the importer’s total Section 232 duties for auto parts, the offset will be capped at the Section 232 auto parts’ duty amount.
Manufacturers may designate specific importers of record—including their suppliers—to use the credits, but any credit amount exceeding the manufacturer’s total parts-related tariff liability will be forfeited.
Application Process for Manufacturers
To access the offset program, automakers must submit documentation certifying:
- Projected vehicle final assembly numbers;
- Projected Section 232 auto parts’ tariff costs (both those incurred directly and indirectly from suppliers);
- Total requested import adjustment offset amount;
- Identifying Importers of Record as eligible by the manufacturer to receive the offset and amount of offset allocated to each importer;
- Certification by senior officer of manufacturer that the information submitted is true, complete, and accurate to the best of their knowledge, and that reasonable due diligence has been conducted to verify the accuracy of the assertions and facts contained in the submissions.
Once approved, CBP will issue the authorized credits to eligible importers of record designated by each manufacturer.
Enforcement and Ongoing Review
CBP will monitor credit usage and can impose penalties for overclaims. The Commerce Secretary will continue tracking imports and may recommend further changes or repeal of duties if national security threats shift. Conflicting provisions in prior proclamations are overridden by this update, which takes effect under the Executive Order of April 29, 2025.
How GHY Can Help?
GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.
By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.
Please contact your Client Care Manager or our Global Trade Services Team gts@ghy.com, or call +1 (800) 667-0771.
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