March 26, 2025 Adjusting Imports of Automobiles And Automobile Parts Into The United States - Proclamation

Background and Legal Basis

• The proclamation is based on the authority granted under:

  • Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862), which allows the President to restrict imports that threaten national security.

  • Section 604 of the Trade Act of 1974 (19 U.S.C. 2483), allowing the President to amend tariff schedules.

  • Section 301 of Title 3, U.S. Code.

• The action follows a 2019 Department of Commerce report finding that imports of automobiles and certain parts threaten U.S. national security due to:

  • Excessive dependence on foreign supply chains.

  • Decline in domestic vehicle production.

  • Vulnerabilities exposed by the COVID-19 pandemic, including shortages in materials, labor, and electronic components.

Findings and Rationale

• As of 2025:

  • Only about 50% of vehicles sold in the U.S. are manufactured domestically.

  • The U.S. share of global automobile production has remained stagnant since 2019.

  • Domestic employment in the auto industry has not significantly improved.

  • Foreign competitors have grown rapidly, aided by unfair subsidies and aggressive industrial policies.

  • U.S. trade agreements and legislative incentives have not sufficiently reversed these trends.

    
    

Main Action: 25% Tariff

• A 25% ad valorem tariff will be imposed on:

  • All imported automobiles starting April 3, 2025.

  • Specific automobile parts starting no later than May 3, 2025 (as published in the Federal Register).

• Tariffs apply in addition to any existing duties, fees, or charges.

  
  

Key Provisions and Conditions

1. USMCA Vehicle Adjustment

• Vehicles qualifying under the U.S.-Mexico-Canada Agreement (USMCA) may be eligible for a partial tariff:

  • Importers can submit documentation of the U.S. content value.

  • The 25% tariff will apply only to the non-U.S. content if approved.

  • Penalties apply for overstatement of U.S. content, including retroactive and prospective tariffs on all affected models.

2. Automobile Parts Exception

• The 25% tariff initially does not apply to auto parts under USMCA until a process is developed to apply the tariff only to non-U.S. content.

• This exception does not apply to:

  • Knock-down kits (vehicle parts shipped in disassembled form).

  • Parts compilations.

3. Expansion of Tariffs

• The Secretary of Commerce must create a process within 90 days to include additional parts in the tariff scope.

• Domestic producers or industry groups may request additions by showing increased import levels that pose national security risks.

• Decisions on such requests must be made within 60 days.

  
  

Regulatory and Enforcement Measures

• The Secretary of Commerce, in coordination with U.S. Customs and Border Protection (CBP) and the U.S. International Trade Commission, will:

  • Modify the Harmonized Tariff Schedule as needed.

  • Monitor auto and parts imports for ongoing national security risks.

  • Inform the President of conditions that warrant further action or elimination of the tariffs.

• CBP is empowered to:

  • Enforce the tariffs.

  • Deny drawbacks (refunds of duties on exports) for these tariffs.

  • Require that automobiles/parts in Foreign Trade Zones be designated “privileged foreign status,” meaning they are subject to duties upon U.S. entry.

    
    

Scope and Sunset

• The tariffs will remain in effect indefinitely unless:

  • Modified, reduced, or terminated by future action.

  • Found unnecessary due to changes in national security circumstances.

    
    

Key Dates

• April 3, 2025 – Tariffs on automobiles begin.

• May 3, 2025 (or earlier) – Tariffs on parts begin, per Federal Register notice.

• 90 days from proclamation – Deadline for developing a process to add more parts.

• 60 days from industry request – Timeframe for Secretary’s response on additional parts.

  
  

Conclusion

This proclamation responds to long-standing concerns under Section 232 about the decline of the U.S. automotive manufacturing sector and its implications for national security. It imposes new tariffs intended to:

• Encourage domestic production.

• Reduce reliance on foreign parts and vehicles.

• Address vulnerabilities in supply chains highlighted by recent economic and geopolitical disruptions.

Reference: Reference: https://www.whitehouse.gov/presidential-actions/2025/03/adjusting-imports-of-automobiles-and-autombile-parts-into-the-united-states/

Writer's Note: Summary made with the use of AI tools for editing and quick processing, facts checked against the order before publishing.