The Trump Administration Friday night added some clarity to its proposed Section 232 tariffs on the import of heavy-duty trucks and truck parts.
The 25% tariff, scheduled to take effect Nov. 1, will apply to the full value of trucks that do not qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA). USMCA-compliant medium- and heavy-duty truck parts, and all U.S. content, will be exempt from the tariffs.
"For medium- and heavy-duty trucks that qualify for preferential tariff treatment under the USMCA, the tariff will only apply to the value of the non-U.S. content in the vehicle," Trump's proclamation reads. The tariff on medium- and heavy-duty truck parts will apply to key parts, including engines, transmissions, tires, and chassis, the Trump administration clarified.
[Related: New truck tariff will spark 'major increase in equipment costs']
All the major North American heavy-truck manufacturers are global companies with assembly operations in the U.S., but many supplement those plants with sister facilities in Mexico. Under the USMCA free trade agreement—a deal Trump signed in 2018 that went into effect in 2020, replacing the North American Free Trade Agreement (NAFTA)—those trucks have generally been allowed into the U.S. tariff-free.
The USMCA exemption, however, could be temporary as Friday's proclamation added that USMCA-compliant medium- and heavy-duty truck parts will not be subject to tariffs until "the Secretary of Commerce, in consultation with U.S. Customs and Border Protection, establishes a process to apply tariffs to the non-U.S. content of the parts."
Trump's proclamation also incentivizes domestic production of medium- and heavy-duty trucks by offering an offset to a portion of tariffs for medium- and heavy-duty truck parts "equal to 3.75% of the aggregate value of all trucks assembled in the United States from 2025 through 2030."
This percentage reflects the duty that would be owed when a 25% tariff is applied to 15% of the value of a U.S.-assembled medium- and heavy-duty truck.
The offset can be used to adjust any Section 232 medium- and heavy-duty truck part tariffs owed by a medium- and heavy-duty truck manufacturer, and the proclamation says equivalent offset programs will also be established for medium- and heavy-duty truck engine manufacturers based on the value of medium- and heavy-duty truck engines assembled in the United States.
Trucks, engines and other components subject to this new tariff will not be subject to additional or existing sectoral tariffs on steel, aluminum, copper, automobiles and automobile parts, and lumber, the administration said, adding they also will not be subject to reciprocal tariffs or the tariffs imposed on Canada, Mexico, Brazil, or India.
In announcing the parameters of the new commercial truck tariff, the Trump administration also reconfigured similar tariffs on passenger vehicles to mirror those imposed on large trucks. It extends the import adjustment offset program for automobile manufacturers through 2030. Automobile producers will be able to offset a portion of tariffs on automobile parts equal to 3.75% of the Manufacturer’s Suggested Retail Price of automobiles they assemble in the United States. This percentage reflects the duty that would be owed when a 25% tariff is applied to 15% of the value of a U.S.-assembled automobile.
