President Trump issued March 26 a proclamation imposing new 25 percent tariffs on imported automobiles and auto parts.
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Authority
The tariffs are being imposed on national security grounds under Section 232 of the Trade Expansion Act of 1962. The Department of Commerce determined in a Section 232 investigation in 2019 that imports of automobiles and certain auto parts were threatening U.S. national security, and Trump said the DOC has advised him that those concerns have only escalated since then. Among other things he cited the fact that only about half the vehicles sold in the U.S. are manufactured domestically, which “jeopardizes our domestic industrial base and national security.” He also asserted that neither revisions to the U.S. free trade agreements with Canada, Mexico, and Korea, nor “investments resulting from other efforts,” have yielded sufficient positive outcomes to eliminate the national security threat from imports.
Affected goods
The proclamation imposes additional 25 percent tariffs (on top of any other applicable duties, fees, exactions, or charges) on the following.
- passenger vehicles (sedans, sport-utility vehicles, crossover utility vehicles, minivans, and cargo vans)
- light trucks
- engines and engine parts, transmissions and powertrain parts, and electrical components
More details on affected products will be available in an annex to the proclamation, which has not yet been published.
The proclamation also requires the DOC to establish within 90 days a process for extending the tariffs to additional auto parts. Such additions may be made by the DOC or at the request of domestic producers or industry associations.
Effective dates
The tariff on automobiles will be effective for goods entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on April 3. The tariff on auto parts will be effective on a date to be specified in the Federal Register but no later than May 3. No termination date for the tariffs has been indicated.
Exceptions
For automobiles that qualify for preferential tariff treatment under the U.S.-Mexico-Canada Agreement, importers may submit documentation to identify the amount of U.S. content (i.e., parts wholly obtained, produced entirely, or substantially transformed in the U.S.) in each model imported, and the tariff will then apply exclusively to the value of the non-U.S. content.
However, if U.S. Customs and Border Protection determines that the declared value of non-U.S. content is inaccurate due to an overstatement of U.S. content, the tariff will apply to the full value of the automobile and will be imposed retroactively to April 3 for all entries of the same model imported by the same importer until the importer corrects the overstatement and the correction is verified by CBP.
For auto parts that qualify for preferential treatment under the USMCA, the tariff will not apply until the DOC establishes in a Federal Register notice a process to apply the tariff exclusively to the value of non-U.S. content.
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