The Trump Administration’s Tariff Proposal Exempts Autos and Many Auto Parts

• The U.S. government has proposed a new round of tariffs on 60 of its trading partners.

• Vehicles and auto parts which are already subject to auto tariffs would be exempt from these new duties.

• Items such as electronics, interior parts, and sub-assemblies could be targeted.

Since the U.S. Supreme Court deemed the Trump Administration’s reciprocal tariffs illegal back in February, Washington has been looking at ways to rebuilt its global tariff structure.

The latest round of new tariffs proposed with this goal in mind could come into effect in July, but it seems the auto industry would be mostly left alone.

Indeed, the proposed tariffs would exempt all products that are already subject to sectoral tariffs implemented under section 232 of the Trade Expansion Act of 1962, which includes most auto products, as well as steel, copper, and aluminum.

In addition, all vehicles and parts that comply with the North American Free-Trade Agreement (CUSMA) would be exempt from the new tariffs as well.

As a justification for these proposed 10 or 12.5% levies on 60 U.S. trading partners, including Canada, South Korea, the United Kingdom, Mexico, Japan, and China, the U.S. administration claims that an investigation revealed these countries haven’t prevented the trade of goods made with forced labour.

All accused countries have refuted this claim, and it is worth remembering that the United States isn’t a stranger to reprehensible labour practices of the sort, as Hyundai and two of its suppliers were accused of having employed minors in their Alabama factories back in 2022.

While complete vehicles and most parts are expected to avoid new tariffs if the proposed framework gets adopted, the automotive industry won’t be spared completely.

Indeed, a number of parts and components involved in auto assembly are likely to be subject to the new tariffs, which would raise costs for automakers.

These components include interior parts, electronics, and sub-assemblies that are manufactured outside of existing trade agreements.

At the moment, automakers have paid about U.S. $19.9 billion in tariffs since the Trump administration returned to office back in January of 2025.

Given that the Supreme Court has ruled these tariffs were illegal and shouldn’t have been paid in the first place, these companies could be refunded, although it isn’t clear how determining exactly how much everyone is due would work in practice.

There is a good probability that the proposed new tariffs will also be challenged in court if they are adopted, adding to the uncertainty that clouds the U.S. economy at the moment.

Source: Automotive News