On or after April 3, 2025, all foreign automobiles imported into the U.S. will be subject to a 25 percent tariff. The new auto tariff will be applied in addition to the general tariff rate of 2.5 percent, plus any applicable steel derivative tariff. President Donald Trump issued a proclamation implementing the new tariffs on March 26, based upon a 2019 report under Section 232 of the Trade Expansion Act of 1962, which concluded that "automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States."

The new auto tariffs will apply to automobiles from all countries. However, importers of autos that qualify for the tariff benefits of the U.S.-Mexico-Canada Free Trade Agreement (USMCA) will be permitted to subtract the value of the U.S. content of the autos from the full value of the vehicle for purposes of applying the 25 percent tariff. 

The proclamation also provides that if U.S. Customs and Border Protection (CBP) determines that the U.S. content has been overstated, the 25 percent tariff will be applied to the full value of the auto without any exclusion of U.S. content. The 25 percent tariff would be applied retroactively (from April 3 to the date of inaccurate overstatement) as well as prospectively. Thus, significant enforcement efforts by CBP are anticipated.

The proclamation also covers certain auto parts in a yet-to-be published Annex. Because the 2019 Section 232 report specifically identified imported engines and engine parts, transmissions and power train parts, and electrical components of vehicles as a threat, it is anticipated that such parts will be subject to the tariffs. Moreover, within 90 days, the proclamation requires the Secretary of Commerce to establish a process for adding additional parts to the Annex.