The Department of Commerce has published procedures by which automobile manufacturers may seek an offset from Section 232 tariffs on auto parts.
A 25 percent Section 232 tariff took effect May 3 for auto parts, which include engines and engine parts, transmissions and powertrain parts, electrical components, and parts of passenger vehicles and light trucks classified under specified HTSUS subheadings. This tariff applies to covered parts even if they qualify for special tariff treatment under a free trade agreement or preference program. However, parts eligible under the U.S.-Mexico-Canada Agreement (other than automobile knock-down kits of parts compilations) are exempt from the tariff until the Department of Commerce establishes a process to apply the tariff only to non-U.S. content.
President Trump issued last month a proclamation providing that, for automobiles assembled in the U.S., manufacturers will be eligible to apply for offsets to the Section 232 tariff in the amount of (1) 3.75 percent of the aggregate manufacturer’s suggested retail price value of all automobiles they assemble in the U.S. from April 3, 2025, through April 30, 2026, and (2) 2.5 percent of the aggregate MSRP value of all automobiles they assemble in the U.S. from May 1, 2026, through April 30, 2027.
The proclamation said that only automobiles that undergo final assembly in the U.S. are eligible to be included in this calculation. Further, the offset amount may only be used by importers of record authorized by the manufacturer and only to offset Section 232 tariffs on auto parts. Manufacturers with approved offsets may determine the importers of record eligible to decrement against those amounts, which may include suppliers in their supply chains for automobiles assembled in the U.S.
The DOC has now announced procedures for administering this offset program, including application, documentation, and certification requirements; eligibility conditions; and coordination with U.S. Customs and Border Protection. Highlights of this information include the following.
- Applications may be submitted starting June 13.
- Documentation required on applications includes production forecasts, tariff liability estimates, offset calculations, and authorized importers of record.
- Approved manufacturers will be notified in writing of approval and amount of offset granted. Relevant offset amount data, including amounts and importer of record numbers, will be transmitted by Commerce to CBP, which will administer the offset at the time of entry summary filing and may request additional documentation to validate entries.
- Offset amounts may be carried forward indefinitely until fully exhausted, provided they were granted based on qualifying automobiles assembled between April 3, 2025, and April 30, 2027.
- No new offset amounts will be granted for automobiles assembled after April 30, 2027.
Click here to stay up-to-date on the scope and implementation of these tariffs.
Click here for ST&R’s three-pronged approach to avoiding, mitigating, and/or recovering these and other tariffs. For further information, please contact ST&R at tariffs@strtrade.com.
Copyright © 2025 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.