A 25% tariff on imported trucks and parts
Last Friday, President Donald Trump made an official announcement to impose tariffs on imported medium- and heavy-duty vehicles and parts. To impose this tax, the president used Section 232 of the Trade Expansion Act of 1962, a law that gives the president the authority to restrict imports that may affect national security.
Vehicles To Be Affected
Originally scheduled to start on October 1, the new proposed start date is November 1. Starting that day, a 25% tariff will apply to trucks that are weight class 3 (10,000 lbs.) or heavier. This means that large pick-up trucks, moving trucks, cargo trucks, and tractors for eighteen-wheelers will be affected. Imported buses will have a lower tariff of 10% applied.
Some foreign-made trucks may have a reduction in this tariff if they qualify under the United States-Mexico-Canada Agreement (USMCA). Vehicles that do not qualify will have the full tariff applied and vehicles that do qualify, the tariff only applies to the non-US parts.
USMCA-compliant truck parts will not be subject to tariffs imposed by this proclamation until members of the Trump cabinet determine a proper method to enforce individual parts.
How This Will Affect Other Tariffs
Vehicles and parts affected by this tariff order will not be affected by additional tariffs on steel, aluminum, copper, automobiles and parts, or lumber. They will also be unaffected by reciprocal tariffs or the tariffs imposed on Canada, Mexico, Brazil, or India.
Reasoning Behind the Tariffs
This proclamation comes with the stated goal of increasing national security by incentivizing domestic manufacturing of equipment essential to the US supply chain.
To further incentivize domestic truck production, Trump's proclamation offers a credit to a pay for tariffs on "truck parts equal to 3.75% of the aggregate value of all trucks assembled in the United States from 2025 through 2030." A percentage that 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.
What Drivers and Employers Should Consider
As a tariff, these price increases will only apply to vehicles imported from other countries and not on foreign vehicles already in the US. Companies ordering a fleet of trucks should be sure of the final price and when said trucks might arrive.
To understand how these tariffs might affect your business, sign up to our newsletter above. Our experts will be posting detailed analysis and updates on this topic soon.