U.S. Applies a 25% Tariff on Imports of Autos and Parts (Guidance on Duty Offset for Parts)

Trade Update • April 2, 2025 | Updated Nov. 2, 2025

Key Points

• A 25% tariff took effect on April 3, 2025, for imported automobiles and light trucks, and on May 3, 2025, for specific auto parts such as engines, transmissions, and electrical components.

• Only passenger vehicles and light trucks are covered by the new duties.

• Vehicles imported under the USMCA may qualify for partial tariff exemptions if importers verify the proportion of U.S.-sourced content, with penalties for misrepresentataion.

• Latest: On October 31, 2025, CBP issued guidance outlining the import adjustment offset process for automobile parts subject to Section 232 duties.

In a decisive move to bolster America’s domestic automotive industry and address long-standing national security concerns, President Donald J. Trump has issued a sweeping new Proclamation – Adjusting Imports Of Automobiles And Automobile Parts Into The United States.

Latest Update: On October 31, 2025, U.S. Customs and Border Protection (CBP) issued guidance on Duty Offset for Imports of Automobile Parts, providing entry filing instructions for importers eligible to apply an import adjustment offset under Section 232 tariffs. This functionality is now available in the Automated Commercial Environment (ACE). More details on the CBP guidance below.

Imports Affected

Effective April 3, 2025, a 25% ad valorem tariff was imposed on:

• Imported automobiles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks.

Effective May 3, 2025, a 25% ad valorem tariff was imposed on:

• Automobile Parts: duty applies to auto parts on passenger vehicles and light trucks (engines and engine parts, transmissions and powertrain parts, and electrical components, and parts of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks. Other vehicles will not be assessed duty at this time.

Full listing of products affected can be found through the Federal Register Automobiles and Automobile Parts, Imports Into U.S.; Adjustment (Proc. 10908), alternatively also accessible via PDF format.

Notably, vehicles qualifying for preferential treatment under the United States-Mexico-Canada Agreement (USMCA) may be partially exempt from full tariffs if importers can substantiate the proportion of U.S.-sourced content in each vehicle. In such cases, and upon approval from the Secretary of Commerce, the tariff would only apply to the value of non-U.S. content. However, any misrepresentation of this content could result in retroactive and prospective application of the full 25% tariff on all affected imports — a move designed to deter manipulation of import declarations.

CBP Guidance: Duty Offset for Imports of Automobile Parts

Entry Filing Instructions

• The offset can only be used up to the amount approved by the Department of Commerce (DOC) and only for tariffs imposed under Proclamation 10908, as amended.
• Importers must enter the DOC-issued Auto Parts Offset License Number in the Importer Additional Declaration Field (Type Code 11) in ACE, following the 8-character format AANNNNNN (with “A” as letters and “N” as numbers).
• The offset applies only to automobile parts classified under HTSUS 9903.94.xx. It cannot be used for MHDV parts under HTSUS 9903.74.xx.

Tariff Application by Country

For imports from Japan, the United Kingdom, and the European Union, Section 232 duties are combined with standard duty rates. Only the Section 232 portion is eligible for the offset.

• Example: Auto parts from the U.K. under HTSUS 9903.94.32 are subject to a total tariff of 10%. Only the portion representing Section 232 duties (the difference between 10% and the base column one rate) can be offset.

For imports from all other countries, importers should:

• Continue to file under HTSUS 9903.94.05 or 9903.94.07.
• Report a duty amount of zero (0) for the Chapter 99 tariff line when applying the offset.

For imports from Japan, the U.K., and EU member countries, importers should:

• Continue filing under HTSUS 9903.94.32, 9903.94.33, 9903.94.43, 9903.94.45, 9903.94.53, or 9903.94.55.
• File zero (0) for the Chapter 99 duty and apply the base (column one) duty to the Chapter 1–97 HTSUS line.

Additional Guidance

• Automobile parts remain subject to Section 232 duties under Proclamation 10908, even when an offset reduces the payable amount.
• Importers claiming an offset are not subject to Section 232 measures on aluminum, steel, copper, or wood, or to other reciprocal or country-specific tariffs (Canada, Mexico, Brazil, Russian Oil/India). For these exemptions, importers must use the corresponding Chapter 99 HTSUS codes where applicable.
• Importers may file a Post Summary Correction (PSC) to request refunds on previously paid Section 232 duties if eligible offsets apply.

CBP has updated the ACE Entry Summary Create/Update CATAIR (v108) and the ACE Error Dictionary CATAIR (v44) to include requirements for offset license number submission. Both documents are available under the Current Capabilities section of the ACE CATAIR webpage on CBP.gov.

For technical assistance, importers may contact their assigned CBP Client Representative or the ACE Help Desk. For inquiries regarding trade remedy programs, visit cbp.gov/trade/programs-administration/trade-remedies or email TradeRemedy@cbp.dhs.gov.

Background

The action stems from a years-long investigation initiated under Section 232 of the Trade Expansion Act of 1962. In 2019, the Secretary of Commerce found that the high volume of imported vehicles and critical parts was undermining the U.S. automotive manufacturing base — a sector considered vital to national defense. President Trump acknowledged these findings in Proclamation 9888 later that year, directing negotiations with key trade partners, including the European Union and Japan. However, no sufficient agreements were reached to address the issue.

Future Flexibility and Expansion

The proclamation also provides a pathway to expand the list of tariffed parts based on evolving industry conditions. The Secretary of Commerce is tasked with establishing a formal process, within 90 days, allowing domestic manufacturers and industry groups to request the inclusion of additional parts if import trends pose a further threat to national security.

In addition, the administration may impose tariffs on foreign trade zone entries of automobiles and parts unless they meet strict domestic status requirements, closing another potential loophole for tariff avoidance.

A Strong Message to Global Competitors

This latest move represents a continuation of the Trump administration’s protectionist approach to trade policy, asserting that a strong domestic manufacturing base is essential for economic stability and national security. The administration has expressed disappointment in the outcomes of prior trade agreements and legislative efforts, arguing that they failed to sufficiently revitalize the sector.

Looking Ahead

While the proclamation provides for continued monitoring and possible future adjustments, it underscores a renewed commitment to reinforcing American automotive manufacturing. Whether these tariffs will lead to long-term reshoring of production or provoke retaliatory measures from trade partners remains to be seen.

For now, automakers, suppliers, and international trading partners must prepare for a new phase in U.S. trade policy — one that places national security and industrial resilience at the forefront.

The information presented is general in nature, and is not intended to constitute legal advice with respect to any event or occurrence, and may not be considered as such.​​ Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.​ Due to the complexity of Customs Regulations, valuations are based on information currently available and should not be considered binding, we recommend obtaining National Customs Rulings in areas of uncertainty.​

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