On Wednesday, March 26, 2025, President Trump signed an executive order (the “EO”) directing a 25% on automobiles and certain automobile parts. As of this writing, there are a few key details missing because the accompanying Federal Register notice has not been published. However, here is what we know so far.

Background

On February 19, 2019, pursuant to Section 232 of the Trade Expansion Act of 1962, the Secretary of Commerce reported that importations of automobiles and automobile parts were harming the national security of the United States. Section 232 gives the President broad authority to address reported national security threats, including the imposition of tariffs. On May 17, 2019, the President instructed the Secretary of Commerce to negotiate with the European Union, Japan, and other countries to reach an amicable solution. The negotiations were not successful. At that time, the President took no additional action, but instructed the Secretary of Commerce to continue to monitor imports of automobiles and automobile parts. According to the March 26, 2025 EO, the Secretary of Commerce informed the President that the national security threats have increased since February of 2019. Based on this information, the President signed the EO which adds a new tariff to automobiles and automobile parts.

Automobile Tariff

The tariff applies to automobiles and automobile parts “specified in Annex I to this proclamation or in any subsequent annex to this proclamation, as set out in a subsequent notice in the Federal Register.” Because the EO has not yet been published in the Federal Register, Annex I does not yet exist. Because we do not know which automobiles will be included in Annex I, we do not know to which automobiles the tariff will apply. 

Specified automobiles that enter for consumption on or after 12:01 EDT on Thursday, April 3, 2025 will be subject to an additional 25% ad valorem duty. However, qualifying USMCA automobiles may be partially exempt from the tariff. An importer may certify the “U.S. content” of the vehicle, and the Secretary Commerce may then apply the tariff to the total value of the automobile, minus the value of U.S. content from the automobile.

If U.S. Customs and Border Protection finds that there has been an overstatement of U.S. content, the importer will be penalized. As a penalty, the 25% tariff will apply to the total value of that automobile and all automobiles of the same model imported previously or subsequently by the overstating importer. This penalty will apply until the overstatement is corrected.

Automobile Parts Tariff

As stated above, because Annex I has not yet been published yet, we do not know to which automobile parts  the tariff will apply.

Specified automobile parts will also be subject to an additional  25% ad valorem duty. This tariff will apply to automobile parts that enter for consumption after a date not yet specified, but no later than May 3, 2025. Automobile knock-down kits or parts compilations are expressly excluded from the tariff.

Qualifying USMCA automobile parts will be exempt from this tariff until the Secretary of Commerce establishes a process for evaluating the non-U.S. content of the automobile parts.

Inclusion Process

The EO directs the Secretary of Commerce to develop, within 90 days, a process for domestic producers of automobiles or automobile parts to request the inclusion of additional automobile parts into the tariff. Therefore, the scope of automobile parts included in the tariff is likely to increase over time.

Conclusion

We will continue to monitor the Federal Register for additional information regarding these new tariffs. As new tariff regulations continue to evolve, navigating these changes requires experienced legal counsel. At Liang + Mooney, PLLC, our seasoned tariff lawyers can answer your questions and concerns with sophisticated legal solutions.  If you seek strategic counsel and insight into how these changes could affect your operations, including questions about which products are included in the scope of the tariff, we invite you to contact us to schedule a consultation.