25% Additional Duty on U.S. Automotive Parts to Begin

U.S. Launches 25% Additional Duty on Automotive Parts: New Era Begins May 3
The United States will implement a 25% additional duty on automotive components and parts starting 3 May 2025. The measure covers a wide range of items, including engines and engine parts, transmissions and powertrain components, electrical systems, as well as passenger car and light truck parts. This development is expected to directly impact cost calculations and pricing for firms exporting parts to the U.S.
At the same time, it was announced that manufacturers assembling vehicles in the U.S. will be granted certain offset (tariff credit) opportunities. Specifically:
•    Between 3 April 2025 – 30 April 2026, manufacturers may offset up to 3.75% of the total MSRP value of vehicles assembled in the U.S. against Section 232 tariffs.
•    Between 1 May 2026 – 30 April 2027, the offset rate will be 2.5%.
This system aims to encourage production with higher domestic content, thereby reducing the tax burden. As the share of U.S. or USMCA-origin content in vehicles increases, the duty payable by manufacturers is expected to decrease. Conversely, firms heavily dependent on imported parts may face greater cost pressures.
To benefit from the offset mechanism, manufacturers must submit documentation to the U.S. Department of Commerce, including production projections, estimated duty cost details, and approval from senior executives.