Under Proclamation 10908 of March 26, 2025 (Adjusting Imports of Automobiles and Automobile Parts Into the United States), tariffs on automobiles have been in effect since April 3, 2025, and tariffs on automobile parts are set to go into effect on May 3, 2025.
On April 29, the president issued an executive order (E.O.) (Amendments to Adjusting Imports of Automobiles and Automobile Parts into the United States) modifying the Section 232 tariffs for automobile parts by creating an import adjustment offset ("Offset") for manufacturers of automobiles assembled in the United States, provided they meet the eligibility requirements. The E.O. reduces Section 232 duties on automobile parts accounting for 15% of the value of an automobile assembled in the United States for one year and equivalent to 10% of that value for an additional year.
Schedule
- Manufacturers may apply for an Offset amount equal to 3.75% of the aggregate Manufacturer's Suggested Retail Price (MSRP) of all automobiles they assemble in the United States from (retroactively) April 3, 2025, through April 30, 2026. This percentage reflects the total duty owed when a 25% duty is applied to parts accounting for 15% of MSRP.
- Manufacturers can apply for an Offset amount equal to 2.5% of the aggregate MSRP value of all automobiles they assemble in the United States from May 1, 2026, through April 30, 2027. This percentage reflects the total duty owed when a 25% duty is applied to parts accounting for 10% of MSRP.
Eligibility
- Only automobiles that undergo final assembly in the United States may be included in the calculation.
- The Offset amount may only be used by importers of record authorized by the manufacturer.
- The Offset amount may only be used to offset duties owed related to that manufacturer's automobile parts tariff liability under Proclamation 10908. If exceeded, the Offset amount is capped at the amount of its Proclamation 10908 liability. Any amount exceeding this cap may not be used to offset other tariff liabilities of the manufacturer.
- A manufacturer may determine the importers of record eligible to use its Offset amount and may include suppliers in its supply chain for automobiles assembled in the United States.
The secretary of commerce ("Secretary") has 30 days to establish a process for manufacturers to seek an Offset. The process will include submission by manufacturers of information and documentation including the following:
- Number of automobiles the manufacturer projects it will assemble in the United States and a list of all applicable plant locations.
- Projected cost of tariffs due to imported automobile parts subject to Proclamation 10908.
- Total Offset amount requested.
- Eligible importer(s) of record.
Once the submission is verified as complete and accurate, the Secretary will approve the application and notify U.S. Customs and Border Protection (CBP). CBP will then confer the Offset amount to the approved importer(s) of record named by the manufacturer.
This E.O. does not apply to the Section 232 duties of 25% on finished automobiles.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
