On March 26, 2025, President Donald Trump issued a Proclamation imposing 25% tariffs under Section 232 of the Trade Expansion Act of 1962 on imports of automobiles and certain automobile parts, citing “a critical threat to U.S. national security.” The tariffs will apply to final assembled automobiles, entered for consumption or withdrawn from warehouse for consumption, on April 3, 2025. Tariffs on automobile parts will go into effect at a time to be specified in a forthcoming Federal Register notice, but no later than May 3, 2025 (except for USMCA-certified parts, which will not be covered until a process is established). The Proclamation notes that these tariffs will continue in effect, “unless such actions are expressly reduced, modified, or terminated.” These ad valorem tariffs are in addition to any other duties, fees, exactions, and charges applicable to such imported automobiles and certain automobile parts articles.

In announcing and implementing these additional tariffs, President Trump is relying on a Section 232 investigation, report and Secretary of Commerce findings from his first administration. On May 23, 2018, former Secretary of Commerce Wilbur Ross self-initiated a Section 232 investigation to determine the effects on the national security of imports of automobiles – including cars, SUVs, vans and light trucks – and automotive parts. Commerce issued its final report on this investigation on February 17, 2019, with a determination that imports of automobiles and certain automobile parts are “weakening our internal economy” and threaten to impair the national security. In May 2019, President Trump delayed taking any action and instead issued a proclamation directing the U.S. Trade Representative (USTR) to negotiate agreements with other countries to address this national security threat. For additional background, see Thompson Hine Updates of June 2018 and May 17, 2019. See also the redacted Section 232 report released in July 2021.

In the March 26, 2025 Proclamation, President Trump specifically references the prior investigation and its findings, noting that the USTR’s negotiations did not lead to any agreements of the type contemplated by Section 232 – and that revisions to the United States-Korea Free Trade Agreement and the United States-Mexico-Canada Agreement (USMCA), “have not yielded sufficient positive outcomes.” As a result, he has determined “that imports of automobiles and certain automobile parts continue to threaten to impair the national security of the United States and deem[s] it necessary and appropriate to impose tariffs.”

According to the new Proclamation:

  • 25% Section 232 tariffs will apply to all automobiles and automobile parts listed in the forthcoming Annex A. 
  • For automobiles that qualify for preferential tariff treatment under the USMCA, importers of such automobiles may submit documentation to the Secretary of Commerce identifying the amount of U.S. content in each model imported into the United States. “U.S. content” refers to the value of the automobile attributable to parts wholly obtained, produced entirely, or substantially transformed in the United States. The Department of Commerce may then approve such imports for an ad valorem tariff of 25% that applies only to the value of the non-U.S. content of the automobile. The non-U.S. content of the automobile will be calculated by subtracting the value of the U.S. content in an automobile from the total value of the automobile.
  • The 25% tariff will not apply to automobile parts that qualify for preferential treatment under the USMCA until such time that the Department of Commerce, in consultation with Customs and Border Protection (CBP), establishes a process to apply the tariff exclusively to the value of the non-U.S. content of such automobile parts.
  • The additional tariff does not apply to automobile knock-down kits or parts compilations.
  • Within 90 days of the issuance of this March 26, 2025 Proclamation, the Department of Commerce must establish a process for including additional automobile parts within the scope of the tariffs based upon a request of a domestic producer of an automobile or automobile parts, or an industry association representing one or more such producers, where the request establishes that imports of additional automobile parts have increased in a manner that threatens to impair the national security.
  • Any automobiles or parts entering foreign-trade zones (FTZs) on or after April 3, 2025, must enter under “privileged foreign status” unless otherwise eligible to enter under “domestic status.”
  • No duty drawback will be available for the duties imposed under these tariffs.
  • CBP will be monitoring entries for inaccurate U.S. content claims (i.e., overstating U.S. content), which, if confirmed to be inaccurate, will result in the application of the 25% tariff to the full value of the entire automobile or automobile part by model and importer, retroactive to April 3, 2025, and prospectively until corrected and verified by CBP. 

The Proclamation references an Annex, which has not yet been released, that identifies all automobile and automobile parts subject to the Section 232 25% tariffs. A separate White House Fact Sheet, indicates that the 25% tariffs will be applied to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks, as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components). Modifications to the Harmonized Tariff Schedule of the United States (HTSUS) subheadings in this Annex will be made, as necessary, by the Secretary of Commerce. Similar products were identified by their HTSUS code in the Section 232 report (p. 112). The engines, transmissions, powertrain parts and electrical components (along with body and chassis, axle, suspension system, steering system and the advanced battery) identified in the report also include most of the “core parts” designated in the USMCA Automotive Rules of Origin. The USMCA establishes a 75% regional value content for these “core parts.” The Section 232 report list, however, extends beyond USMCA core parts, including a number of electrical components such as batteries, ignitions, switches for turn signals and windshield wipers, cameras, radios, odometers, LED lamps and clocks, among others.

The Annex will provide guidance for the covered automobiles and automobile parts. Additionally, the Proclamation presents several compliance challenges that will need to be addressed in forthcoming guidance from Commerce or CBP. The Proclamation indicates that automobile parts listed in the Annex and originating under USMCA will not be subject to the Section 232 tariffs until such time as CBP determines the methodology for doing so (a similar approach was followed for the recent Section 232 steel and aluminum derivative tariffs) and no later than May 3, 2025. A plain reading of this text indicates that automobile parts listed in the Annex, but not USMCA- originating, will be subject to the 25% tariffs on the effective date, i.e., April 3, 2025, and will not have a potential delay in implementation. 

The Proclamation defines “U.S. content” as wholly obtained, produced entirely, or substantially transformed in the United States. The overwhelming majority of automobiles and automobile parts will fall within the “substantially transformed” category as these articles rarely are wholly obtained or produced entirely in the United States. However, USMCA-certified automobiles and automobile parts follow the USMCA Automotive Rules of Origin, not the general substantial transformation test. A question immediately arises if automobile producers and automobile parts manufacturers must now certify USMCA Automotive Rules of Origin and perform the substantial transformation analysis. The result may be the same based on the strict USMCA Automotive Rules of Origin; however, a similar dual-step approach has been used at the intersection of USMCA and Section 301 China tariffs and has led to mixed results. Regardless of the outcome, compliance obligations may require manufacturers to implement this dual-step approach, which typically is not already in place. 

Looking ahead, the Proclamation results in the United States achieving a U.S.-content preference outcome for automobile and automobile parts imports explicitly rejected by a USMCA dispute resolution panel (see Thompson Hine Updates of January 17, 2023). There, the United States argued that the USMCA requires vehicle producers to track the originating (North American-made) components and non-originating components in core parts all the way through the assembly process. This new U.S.-content preference would abandon the longstanding “roll-up” method used in the North American Free Trade Agreement (NAFTA), where once a component met the rules of origin – for example, at 61% North American-made regional value content – that component then would be calculated as 100% North American-made throughout the subsequent production process. Canada and Mexico objected to that approach, and a USMCA dispute resolution panel rejected the U.S. interpretation. The United States has not implemented that decision, and it remains a likely significant area of negotiation in the upcoming USMCA review process. The Proclamation accelerates and extends that interpretation by requiring manufacturers to now trace U.S. content (not just North American content) for a list of automobile parts that extend beyond core parts. While President Trump has described these Section 232 tariffs as “permanent,” it is anticipated that they will be a key part of the USMCA review.