U.S. to Apply a 25% Tariff on Imports of Autos and Parts – Updated

Trade Update • April 2, 2025

n 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.

Imports Affected

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

• Automobile Parts: duty will only apply 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.

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.​

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.