Everything You Need To Know About America's 25% Auto Tariffs

You may have heard— President Donald Trump has imposed a 25% tariff on imported automobiles and select auto parts brought into the United States.

The new White House plan will have widespread effects on vehicle pricing, manufacturing strategies, and supply chains across the automotive industry. We don't know yet exactly how much more expensive this is going to make cars and car parts—otherwise, this is everything you need to know about Trump's latest order.

When Do the New Tariffs Take Effect?

The 25% tariff will apply to imported automobiles beginning at 12:01 a.m. EDT on April 3, 2025. Tariffs on auto parts will follow no later than May 3, 2025. These tariffs are in addition to existing duties and fees on imported vehicles and components.

Which Vehicles Are Affected?

The tariffs apply to all imported vehicles and certain auto parts unless they meet specific criteria under the United States-Mexico-Canada Agreement (USMCA). Any vehicle or part not substantially produced in the U.S. will be subject to the full 25% tariff.

What If a Vehicle Qualifies Under USMCA?

Vehicles that qualify for preferential treatment under USMCA may be subject to a reduced tariff, applied only to the non-U.S. content of the vehicle. Importers must submit documentation detailing the value of U.S. content in each imported model. That value is subtracted from the total value of the vehicle to calculate the portion subject to the 25% tariff.

For example, A $40,000 imported vehicle with $30,000 in verified U.S. content would face the 25% tariff on the remaining $10,000, resulting in a $2,500 tariff.

Are Knock-Down Kits or Assemblies Treated Differently?

Yes. The limited exemption process for auto parts under USMCA does not apply to knock-down kits used for vehicle assembly. Only individual auto parts that meet specific USMCA and content criteria may qualify for reduced tariffs once a formal process is announced.

What Happens If an Importer Overstates U.S. Content?

If U.S. Customs and Border Protection (CBP) finds that an importer inaccurately overstates U.S. content, the entire vehicle value becomes subject to the 25% tariff. Additionally, the penalty potentially applies retroactively to all vehicles of the same model from that manufacturer until the issue is corrected and verified.

What’s Next for Auto Parts?

Although the 25% tariff will apply to parts starting no later than May 3, 2025, the administration will develop a process to apply tariffs only to the non-U.S. content of eligible parts.

The Secretary of Commerce has 90 days to establish a framework for evaluating additional parts for inclusion, including provisions for industry groups to request the addition of specific components that may pose national security concerns.

No Tariff Refunds

The new rules prohibit the use of duty drawbacks, meaning importers cannot recover tariff costs through re-export or other refund mechanisms.

Monitoring and Adjustments

The Secretary of Commerce is directed to continuously monitor the impact of auto and parts imports on national security and to recommend changes if needed. The tariff rate could be adjusted or terminated based on ongoing review.

Bottom Line for Automakers and Buyers

With tariffs set to begin on April 3, manufacturers importing vehicles or components with significant non-U.S. content will face steep cost increases. Automakers with more domestic production or high U.S. content—such as Tesla or Ford—are positioned to benefit. Others, especially those relying heavily on global supply chains or production in Mexico, Canada, South Korea, or Europe, could be forced to adjust vehicle pricing, shift production, or stop selling those models altogether.

For car buyers, the likely result is higher sticker prices on almost every single mode on sale. AutoGuide will continue to track updates as more details emerge regarding implementation and industry response.

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