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On October 17, 2025, the White House issued a Presidential Proclamation:
- Imposing a 25% tariff on imports of medium- and heavy-duty vehicles (MHDVs) and non-United States-Mexico-Canada Agreement (USMCA)-compliant parts (MHDVPs) effective November 1;
- Imposing a 10% tariff on buses effective November 1;
- Providing offsets for auto and MHDV manufacturers equal to 3.75% of the aggregate value of all such vehicles assembled in the United States until 2030;
- Reducing steel and aluminum tariffs to a minimum of 25% for certain USMCA-compliant goods supplied to US auto or MHDV manufacturers;
- Clarifying that the auto, MHDV, MHVDP, and bus tariffs do not stack with any other Section 232 tariffs or reciprocal tariffs; and
- Clarifying how the tariffs will be administered.
The Proclamation is based on findings from the Department of Commerce's Section 232 investigation, which concluded that the United States is overly reliant on foreign suppliers for critical components used in the domestic production of trucks and buses. These include engines, batteries, transmission shafts, castings, forgings, and other essential parts. The Administration determined that this dependency creates national security vulnerabilities, prompting the imposition of new trade restrictions.
Scope of Coverage
The new tariffs apply to a broad range of vehicles and components. Medium- and heavy-duty trucks covered by the Proclamation include Class 3 through Class 8 vehicles—such as large pickup trucks, moving trucks, cargo trucks, dump trucks, and tractors used for eighteen-wheelers. For trucks that do not qualify for preferential treatment under the USMCA, the tariff will apply to the full value of the vehicle. For those that do qualify, the tariff will apply only to the value of the non-US content.
Truck parts subject to the tariff include engines, transmissions, tires, and chassis. USMCA-compliant parts will not be subject to the new tariffs until the Secretary of Commerce, in consultation with US Customs and Border Protection (CBP), establishes a process to apply tariffs to the non-US content. However, knock-down kits or equivalent compilations of parts used to assemble medium- and heavy-duty vehicles will be subject to the full tariff regardless of USMCA qualification.
The Proclamation also imposes a 10% tariff on imports of buses, including school buses, transit buses, and motor coaches.
Offset Programs and Harmonization
To support domestic production, the Proclamation introduces a tariff offset program for medium- and heavy-duty truck manufacturers. These producers will be eligible for an offset equal to 3.75% of the aggregate value of all trucks assembled in the United States from 2025 through 2030. A similar offset will be available to engine manufacturers based on the value of engines assembled domestically. These offsets can be used to reduce the amount of Section 232 tariffs owed on imported truck parts.
Recognizing the overlap between the truck and automobile industries, the Proclamation harmonizes the Section 232 auto parts tariff offset program with the new truck program. The auto parts offset program is extended through 2030, allowing automobile manufacturers to offset a portion of tariffs on imported parts equal to 3.75% of the Manufacturer's Suggested Retail Price (MSRP) of automobiles assembled in the US. An equivalent offset program will also be established for automobile engine manufacturers.
Tariff Stacking and Exemptions
The Proclamation addresses the issue of tariff stacking, where multiple tariffs apply to the same product or supply chain. It clarifies that products remain "subject to" these proclamations even if the tariff is not owed due to USMCA compliance, offset use, or other trade agreements. The Annex to the Proclamation provides important exemptions for medium- and heavy-duty vehicle parts, which will not be subject to additional duties under the following headings:
- Semi-finished copper products and copper-intensive derivatives (e.g., 9903.78.01)
- Aluminum and derivative aluminum products (e.g., 9903.85.02, 9903.85.04, 9903.85.13)
- Iron or steel and derivative products (e.g., 9903.81.87, 9903.81.89, 9903.81.99)
- Products of Canada and Mexico (e.g., 9903.01.10, 9903.01.01)
- Wood products (e.g., 9903.76.01 through 9903.76.03)
Adjustments to Steel and Aluminum Tariffs
The Proclamation also authorizes the Secretary of Commerce to reduce tariffs imposed under Proclamations 9704 and 9705, governing steel and aluminum, by up to half for producers operating in Canada or Mexico that supply US automobile or MHDV manufacturers. These reductions are limited to quantities equal to newly committed US production capacity and only apply to materials that qualify for USMCA preferential treatment and were smelted and cast (or melted and poured) in Canada or Mexico. The adjusted rate may not fall below 25%.
Drawback Claims
As of the effective date of the Proclamation, only manufacturing drawback claims made under subsections (a) and (b) of Section 313 of the Tariff Act of 1930 (19 U.S.C. § 1313(a)–(b)) will be available for duties imposed on MHDVPs and automobile parts. No other drawback claims will be permitted.
Importer Flexibility and Certification
Importers of record may declare a part for treatment under either the automobile parts tariff or the MHDVP tariff, provided the part:
- Is not already subject to either tariff;
- Is not classifiable under Chapters 72, 73, or 76 of the Harmonized Tariff Schedule; and
- Will be used for automobile or MHDV production or repair in the US, as certified by the importer.
Similar provisions apply to auto parts, with specific exclusions and documentation requirements outlined in the Proclamation.
How to Prepare
With the November 1 effective date quickly approaching, importers and manufacturers should begin reviewing their product classifications, supply chain exposure, and eligibility for offset programs. The creation of new tariff boxes, the introduction of offset mechanisms, and the harmonization of overlapping programs will require careful compliance planning. Companies that import affected vehicles or components should also evaluate whether they may qualify for relief under the offset programs or USMCA provisions.
Our International Trade and Customs Specialty Team at Butzel is closely monitoring the rollout of these new measures and is available to assist with classification reviews, compliance strategies, and navigating the offset application process. If your business is impacted by these changes, we encourage you to reach out to discuss how best to prepare. For the latest insights and news, please explore our Tariff and Trade Resource Center.
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.
