President Donald Trump Issues Exemptions For Auto And Auto Part Tariffs

On April 29, President Donald Trump signed a proclamation amending trade penalties for the auto sector. Specifically, as this White House fact sheet pointed out, the order offers an offset to a portion of tariffs for automobile parts used in vehicles that are assembled vehicles in the United States. The offset will be equal to 3.75 percent of the Manufacturer’s Suggested Retail Price (MSRP) of a manufacturer’s U.S. production for the next year, from April 3, 2025 to April 30, 2026, and 2.5 percent of U.S. production the year after, from May 1, 2026 to April 30, 2027.

For instance, if a manufacturer builds a car in the United States that has 85 percent U.S. or United States-Mexico-Canada Agreement (USMCA) content, the manufacturer effectively will not owe tariffs on that vehicle’s production for the first year. If a manufacturer builds a car in the United States that is 50 percent U.S. or USMCA content and 50 percent imported from elsewhere, then instead of paying the tariff on the full 50 percent of the imported car parts, the manufacturer will effectively only pay on 35 percent for the first year.

All other automobile imports will still be subject to the 25 percent tariff.

The proclamation sets strict penalties for importers who claim tariff reduction in excess of the approved amounts. In his order, the president also clarified that the U.S. auto tariffs would not be stacked on top of some other levies imposed by the administration, including trade penalties on steel or aluminum.

As originally planned, auto parts covered under the USMCA will be exempt from these penalties. Read more at this link and at this link.