27 Mar New Executive Order Imposing Tariffs on Vehicles and Vehicle Parts Imported into the US.
On March 26, 2025, US President Donald Trump issued Executive Order (“EO”) to impose 25% import tariffs on vehicles and vehicle parts.
This EO applies to sedans, sport utility vehicles, crossover utility vehicles, minivans, cargo vans and light trucks. Regarding vehicles parts, this tariff applies to engines, engine parts, transmissions, powertrain parts, and electrical components.
These new tariffs are taken as a measure to protect the US industrial base and national security.
Specifics on the automobiles and parts will be published by the US government in the official journal (i.e., Federal Register).
The EO in a nutshell
- Automobiles listed by the Federal Register will be subject to a 25% tariff upon entrance for consumption on or after 12:01 a.m. eastern on April 3, 2025. (April 2, 2025, 10:01 p.m. MEX).
- Auto parts, to be published by the Federal Register, will be subject a 25% tariff. Entrance into force of this tariff will be when published, but not later than May 3, 2025.
- No end date for these tariffs. President Trump may reduce, modify, or terminate the remedy at will.
- The tariffs are on top of any duties, taxes, and fees already applicable to those goods upon importation.
- There is no blanket exception for USMCA-qualified goods.
- USMCA qualified parts will be subject to a specific procedure to determine and apply the tariff on the non-US parts.
- Goods subject to the tariffs admitted to a Foreign Trade Zone after the effective date must be entered in "privileged foreign status" and will be subject to the duties when withdrawn for consumption.
- Drawback is not permitted.
How could this EO impact the Mexican automobile manufacturer´s industry?
Automobiles and parts produced in Mexico will be subject to the 25% tariff at the time of importation, regardless of their USMCA origin qualification, if at all.
The importer of the automobiles in the US may apply to exclude “US-content parts” from the 25% tariff. However, these “US-content parts” are those wholly obtained, produced entirely, or substantially transformed in the US. Thus, confirming 25% tariffs on Mexican and Canadian parts.
Additional parts may be included within 90 days following issuance of the EO. This inclusion could be made upon request of US domestic producers and industry associations representing those producers.
Mexico and Canada have not yet issued official retaliation measures, if any, other than qualifying this EO as in violation of the USMC (by the Canadian Government).
Based on the above, Mexican exporters of automobiles and automobile parts should understand the impact this EO represents to their operation, as well as the available alternatives to try to mitigate this impact.
The members of the Foreign Trade area of Cuesta Campos at are your disposal to discuss and evaluate any possible action to understand and mitigate the impact of these tariffs.
Contact
Alejandro Martínez
amartinez@cuestacampos.com
Ana Victoria Parra Aceves
vparra@cuestacampos.com
THE ABOVE IS PROVIDED AS GENERAL INFORMATION PREPARED BY PROFESSIONALS WITH REGARD TO THE SUBJECT MATTER. THIS DOCUMENT ONLY REFERS TO THE APPLICABLE LAW IN MEXICO. WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE ACCURACY, NO RESPONSIBILITY CAN BE ACCEPTED FOR ERRORS OR OMISSIONS. THE INFORMATION CONTAINED HEREIN SHOULD NOT BE RELIED ON AS LEGAL, ACCOUNTING OR PROFESSIONAL ADVICE BEING RENDERED.