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New 25% Tariffs on Imported Vehicles and Auto Parts – Effective April & May 2025
Starting April 3, 2025, the U.S. government imposed a 25% tariff on all imported passenger vehicles, including sedans, SUVs, minivans, crossovers, and cargo vans — regardless of where they come from.
Then, starting May 3, 2025, this 25% tariff will also apply to all imported auto parts such as engines, transmissions, powertrain parts, and electronic components. More parts may be added within 90 days of the announcement made on March 27, 2025.
These tariffs are being enforced under Section 232 of the Trade Expansion Act of 1962, which allows tariffs to be applied for national security reasons.
USMCA Exemptions for Canada and Mexico
Vehicles and parts originating in Canada or Mexico may be exempt from the 25% tariff if they meet the rules of origin under the United States-Mexico-Canada Agreement (USMCA).
- If approved, USMCA-qualified vehicles can exclude their U.S. content from the tariff.
- Parts that qualify under USMCA, whether made in the U.S. or not, can also be exempt — but only temporarily, until the U.S. government sets up a process to apply tariffs solely to the non-U.S. content.
- After this transition period, importers must get approval from the Department of Commerce to continue excluding U.S.-made parts from tariffs.
How the Tariff is Applied
This 25% tariff adds on top of any existing tariffs, such as:
- The 25% tariff on Canadian and Mexican goods (in place since March 4, 2025)
- Tariffs on steel and aluminum (since March 12, 2025)
- Regular MFN (Most-Favored Nation) tariffs and any anti-dumping duties
Example: If a vehicle from Mexico doesn’t qualify for USMCA, the total tariff could reach 77.5%, combining the 25% vehicle tariff, 25% March tariff, 25% steel/aluminum tariff, and the standard 2.5% MFN duty.
Warning: Don’t Misreport U.S. Content
If an importer overstates the U.S.-made value of a vehicle or part, they risk serious penalties. In such cases:
- The 25% tariff will apply to the entire product value, including U.S.-made parts.
- The penalty is retroactive to April 3, 2025, for all units of the same model by that importer.
- The full tariff continues to apply until U.S. Customs verifies the issue is fixed.
Important for Importers
These new tariffs may increase your customs bond requirements, so check your bond coverage and adjust as needed.
If you haven’t yet done the paperwork to certify USMCA eligibility, do it as soon as possible.
The 25% tariff applies until certification is confirmed.
No duty drawback (refunds) will be available for these tariffs.
