On March 26, 2025, President Trump signed a presidential proclamation imposing an additional 25% tariff on all imports of passenger vehicles, light trucks, and certain automotive parts.1 The tariffs on finished vehicles will enter into effect on April 3 and the tariffs on automobile parts will enter into effect no later than May 3 (the exact date will be announced in a future notice). The proclamation allows for a temporary exclusion for automobile parts imported under the United States – Mexico – Canada Agreement (USMCA), which will eventually be replaced with a partial tariff exemption for US content (finished vehicles imported under USMCA will also have a US content exemption). Other than the US content exemptions, the tariffs apply to all imports from all countries. Details on specific product coverage and other implementation instructions will be provided in forthcoming government notices.
Covered automotive products
The additional 25% tariff applies to all imports of
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passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans);
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light trucks; and
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certain listed automobile parts (engines, transmissions, powertrain parts, and electrical components).
When published to the Federal Register in a few days, the proclamation will include a technical annex listing the specific Harmonized Tariff Schedule of the United States (HTSUS) codes subject to the tariffs.
The proclamation also instructs the Department of Commerce to, within 90 days, establish a process to identify and impose tariffs on additional automobile parts. Along with the Department of Commerce selecting new automobile parts to list, the process will also allow domestic manufacturers to request the inclusion of specific automobile parts. The Department of Commerce will issue a determination on these requests within 60 days of receipt, with the tariff taking effect the day after the determination is published to the Federal Register.
Approximately half of all vehicles sold in the United States are imported, and nearly 60% of the parts used in vehicles assembled in the United States are sourced from abroad. Mexico, Korea, Japan, Canada, and Germany account for the largest sources of vehicle imports into the United States.
Enforcement dates
The tariffs enter into effect on two dates:
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For passenger vehicles and light trucks, the tariffs will apply to goods entered for consumption or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on April 3, 2025.
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For automobile parts, the tariffs will apply on a date that will be specified in a future Federal Register notice, but which must be no later than May 3, 2025.
The proclamation includes no exemptions from the tariffs for shipments already in transit to the United States.
The proclamation does not include an end date for the tariffs, nor does it specify any conditions under which the Trump administration may consider ending them. During the press conference announcing the tariffs, Trump said he intends for the tariffs to be permanent.
Tariff rates
The tariff will impose an additional 25% ad valorem on imports from all countries, on top of any other applicable duties, fees, exactions, and charges. The United States’ current most-favored nation (MFN) tariff rate on passenger vehicles is 2.5%, and the tariff rate on light trucks is 25%. With the additional 25% tariff, the total tariff rate will be 27.5% for passenger vehicles and 50% for light trucks from countries without a free trade agreement with the United States. Other tariffs, such as the Section 301 tariffs imposed on China and the new tariffs on Canada, Mexico, and China, will also be added to the new 25% rate.
Temporary tariff exemption for automobile parts and US value exemption for finished vehicles under the USMCA
The tariff order includes a temporary exemption for imports of automobile parts that qualify under the USMCA’s preferential duty treatment rules in HTSUS general note 11 (there is no temporary exemption for finished automobiles or “automobile knock-down kits or parts compilations”). The USMCA tariff exemption will remain in place until the Department of Commerce and US Customs and Border Protection (CBP) establish a process by which the 25% tariff can be applied only to the non-US content of USMCA automobile parts imports. Under this prospective process, companies importing automobile parts under USMCA would be able to certify their products’ US content and only pay the tariff on the non-US content. The timeline for the development of this process is uncertain.
A US content exclusion for finished vehicles imported under USMCA will enter effect immediately on April 3. The proclamation instructs importers of finished vehicles to “submit documentation to the Secretary [of Commerce] identifying the amount of US content in each model imported into the United States.” US content is defined as the value “attributable to parts wholly obtained, produced entirely, or substantially transformed in the United States.”
Other implementation details
US Foreign Trade Zone implications: The proclamation states that goods subject to the additional tariffs and admitted into a US foreign trade zones on or after the date on which the tariffs enter into effect may only enter in Privileged Foreign Status. These products would retain the duty even if processed into a different good in the Foreign Trade Zone.
Duty drawback: The proclamation states that “no drawback shall be available with respect to the duties imposed pursuant to this proclamation.”
The proclamation does not include any information on treatment of goods in transit, temporary importation under bond (TIB), or effects on temporary duty exemptions, although the government may issue guidance on these topics at a later date. The Department of Commerce and CBP will likely issue additional implementing instructions over the next few days. Though not included in the version of the presidential proclamation published on March 26, the list of covered HTSUS codes will be included in a technical annex when the White House publishes the proclamation to the Federal Register sometime in the next few days.
Section 232 of the Trade Expansion Act of 1962
The tariff order is a modification to a Section 2322 action on automobile trade that Trump adopted during his first term as president in 2019. Relying on the 2019 action as a legal basis allowed the Trump administration to implement the tariff quickly and without any new administrative processes. The Section 232 report submitted to Trump in 2019 found that imports of automobiles and certain automobile parts were threatening to impair the national security and recommended options, including a 25% import tariff.3 In a 2019 presidential proclamation,4 Trump concurred with the Department of Commerce’s finding and directed the United States Trade Representative (USTR) to negotiate agreements with the EU and Japan to address the threatened impairment from imports. The proclamation also directed the Secretary of Commerce to monitor automobile and automobile part imports and inform the president of any recommendations for further action. The Trump administration has decided the 2019 action remains active and is thus issuing the additional 25% tariffs based on a recommendation by the Secretary of Commerce “that, since the February 17, 2019, report, the national security concerns remain and have escalated.”
We provide below a list of partners and senior attorneys within the Global International Trade Practice of White & Case. Please contact any of them with questions about this report or other trade issues.
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Washington, DC: David Bond (Partner); Ryan Brady (Partner); Cristina Brayton-Lewis (Partner); Jay Campbell (Partner); Nicole Erb (Partner); Farhad Jalinous (Partner); David Lim (Partner); Gregory Spak (Partner)
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Mexico: Francisco de Rosenzweig (Partner); Carlos Vejar (Local Partner)
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Brussels: James Killick (Partner); Sara Nordin (Partner)
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Geneva: Jasper Wauters (Partner); Charles Julien (Partner)
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London: Chris Thomas (Counsel); Ed Pearson (Senior Associate)
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Paris: Orion Berg (Partner)
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Tokyo: William Moran (Partner)
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Dubai: Marcus Sohlberg (Counsel)
1 Presidential Proclamation of March 26, 2025: “Adjusting Imports of Automobiles and Automobile Parts into the United States;” and Fact Sheet: “President Donald J. Trump Adjusts Imports of Automobiles and Automobile Parts into the United States.”
2 19 U.S.C. §1862; and 15 C.F.R. part 705. More information on BIS’ Section 232 activities can be found on the BIS website.
3 “Publication of a Report on the Effect of Imports of Automobiles and Automobile Parts on the National Security: An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended,” 86 FR 62028 (November 8, 2021).
4 “Adjusting Imports of Automobiles and Automobile Parts Into the United States,” 84 FR 23433 (May 21, 2019).
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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