Duty Refunds for U.S. Vehicle Assemblers: What You Need to Know About New Auto Tariffs
On April 29, 2025, President Trump signed a proclamation modifying the auto tariff rules first introduced in Proclamation 10908. These changes target imported auto parts used in passenger vehicles and light trucks, setting a 25% tariff starting May 3, 2025.
But there’s good news for companies assembling vehicles in the U.S.—you could be eligible for duty refunds.
🔗 View the full Proclamation here
💡 What’s Changing?
Starting May 3, 2025, certain imported parts like:
- Engines & engine parts
- Transmissions & powertrain components
- Key electrical systems
…will face a 25% Section 232 tariff.
These tariffs aim to boost U.S. production and reduce dependency on foreign manufacturing.
🏭 Refund Program: “Import Adjustment Offset”
If you assemble vehicles in the U.S., you may qualify for a tariff refund based on the retail value of the vehicles you produce.
📉 How Much Can You Claim?
- 3.75% of total MSRP value for vehicles assembled April 3, 2025 – April 30, 2026
- 2.5% of total MSRP value for vehicles assembled May 1, 2026 – April 30, 2027
These refunds help offset the cost of the 25% parts tariff.
📋 How to Qualify
The Department of Commerce will launch an application process by May 29, 2025.
To apply, manufacturers (OEMs) must submit:
- Final assembly locations and projected production volumes
- Estimated tariff costs (for themselves and suppliers)
- List of authorized importers/suppliers
- Certification from a senior officer
Once approved, U.S. Customs and Border Protection (CBP) will apply the offset to reduce your import duty costs.
⚠️ Suppliers must be authorized by the OEM to access this benefit — it’s not automatic.
🌎 What About USMCA Parts?
There’s no immediate 25% tariff on auto parts qualifying under USMCA (United States–Mexico–Canada Agreement). The rules are still evolving, but here’s what we know:
- Vehicles with 85% U.S./USMCA content may pay no tariffs on parts.
- Vehicles with 50% U.S./USMCA content could still receive partial exemptions.
Stay tuned for formal guidance.
🚫 No “Stacking” of Multiple Tariffs
A separate Executive Order confirms that these auto tariffs won’t be combined with:
- Steel & aluminum tariffs
- Synthetic opioid/fentanyl-related tariffs under IEEPA
Each category will remain separate to avoid excessive double-duty penalties.
✅ Key Takeaways
- 25% tariffs on imported auto parts start May 3, 2025.
- OEMs assembling in the U.S. can claim up to 3.75% or 2.5% MSRP refunds.
- Application process opens May 29, 2025.
- OEMs must authorize suppliers to benefit from the duty refund.
- USMCA parts likely exempt, but final confirmation is pending.
- Tariffs won’t stack with other trade penalties.
💬 Have questions about how this affects your import or supply chain? Drop a comment or reach out — we’re here to help.
🔗 Read the full proclamation on whitehouse.gov
