Trump’s 15% global tariff will not apply to auto parts, the White House has confirmed. The text of the proclamation itself, and a fact sheet accompanying it, exempted certain imported vehicles and parts from the temporary new tariff.
The text said: “Some goods will not be subject to the temporary import duty because of the needs of the U.S. economy or in order to ensure the duty more effectively addresses the fundamental international payments problems facing the United States.”
It then listed the following:
- Certain critical minerals, metals used in currency and bullion, energy, and energy products; natural resources and fertilizers that cannot be grown, mined, or otherwise produced in the United States or grown, mined, or otherwise produced in sufficient quantities to meet domestic demand
- Certain agricultural products, including beef, tomatoes, and oranges
- Pharmaceuticals and pharmaceutical ingredients
- Certain electronics
- Passenger vehicles, certain light trucks, certain medium and heavy-duty vehicles, buses, and certain parts of passenger vehicles, light trucks, heavy-duty vehicles, and buses
- Certain aerospace products
- Informational materials (e.g., books), donations, and accompanied baggage
It should be noted that the proclamation doesn’t say “all vehicles and parts” and it is currently unclear which exact parts are exempt and which aren’t. But the list of exempt goods is pretty beneficial to the automotive industry.
Electronics, metals like steel, aluminum, and copper, rare earth metals like cobalt, and other minerals critical to battery manufacturing like lithium and graphite are all likely to be included. While some of those minerals are present in the United States, they can not be extracted in quantities capable of meeting current industrial demands at this exact time.
Does this make auto parts and other materials completely tariff free?
You may be wondering if this makes auto parts tariff free. It doesn’t. Previous import taxes that apply to auto parts and materials will still apply, said parts and materials have just managed to dodge the new 15% tariff Trump imposed following the Supreme Court decision on February 20.
Oddly enough, if the global 15% tariff replaced what was already in place, automakers and consumers would likely be better off. The majority of auto parts from the majority of places are still subject to a 25% tariff. This applies to parts for passenger vehicles, light trucks, medium trucks, and heavy duty trucks. There are exceptions, with parts from the UK being subject to a 10% tariff instead, and auto parts from certain other nations, including EU countries, Japan, and South Korea, being tariffed at 15%.
Steel (aside from stuff that is either melted and poured in the US, or USMCA-compliant imports from Mexico or Canada) is tariffed at 50%. The one exception is British steel, which would be tariffed at 25% if the British still made it.
Canada and Mexico still escape vehicle import tariffs thanks to the USMCA exemption, though relations with Canada remain sour and this could change. Imported vehicles from most other nations tend to carry a 25% tariff, but China is a notable exception. Tariffs on Chinese vehicles are currently heavy and layered, with a 100% “Section 301 Tariff” and an additional 25% “National Security” (Section 232) tariff applying to Chinese EVs. Chinese ICE vehicles are subject to a 25% Section 301 and 25% Section 232 tariff.
With that being said, demand for cheap vehicles is growing, Canadians have started to embrace cheap Chinese vehicle imports, and even Ford (historically one of the biggest barriers to Chinese vehicles entering the US) seems to be on board with some form of collaboration.
So all of that could change pretty soon.
