Additional 25% on Cars, Light Trucks Take Effect April 3; Parts Will Come Later, by May
Additional 25% tariffs for cars and light trucks and cargo vans will take effect 12:01 a.m. ET on April 3, with tariffs on parts including engines and engine parts, transmissions and powertrain parts, and electrical components coming later, but no later than May 3, said an executive order issued by President Donald Trump.
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The 25% tariff "is in addition to any other duties, fees, exactions, and charges applicable to such imported automobiles and certain automobile parts articles," the executive order said. The annex listing the tariff numbers affected by the order has not yet been published.
Under the order, importers of USMCA-qualifying automobiles will be eligible to pay tariffs only on non-U.S. value of their automobiles, provided they submit documentation proving how much U.S. content is in the auto in the form of parts wholly obtained, produced entirely, or substantially transformed in the U.S.
The 25% tariff won't apply to auto parts that qualify for USMCA at first. The tariffs will take effect once the commerce secretary and CBP establish "a process to apply the tariff exclusively to the value of the non-U.S. content" of the parts.
At the same time the commerce secretary is working on that process, he will accept applications from domestic parts makers outside of this list who argue that there should be a 25% additional tariff on imported parts they compete with, because imports have increased of those parts.
Trump wrote in the executive order that he agreed with the February 2019 Section 232 report that automobiles and auto parts were being imported at such a volume that they threatened to impair national security.
He said that the revisions to the U.S.-Korea free trade agreement -- which extended the period of 25% tariffs on light trucks -- and the renegotiation of NAFTA "have not yielded sufficient positive outcomes."
"In recent years, American-owned automotive manufacturers have experienced numerous supply chain challenges, including material and parts input shortages, labor shortages and strikes, and electrical-component shortages," the order said, as proof that the tariffs are necessary.
If additional parts are to be tariffed, there will be a Federal Register notice as soon as practicable after the commerce secretary's decision, and the tariffs will be collected one day after that notice.