New Tariff on Commercial Trucks and Parts and Extension of the Rebate Credit Process for Passenger Vehicles

What's new:  On October 17, the President announced a 25% tariff on imports of Class 3 to Class 8 medium- and heavy-duty trucks and truck parts under Section 232 of the Trade Expansion Act of 1962. The new tariff will become effective on November 1. The tariff on truck parts will apply to key parts, including engines, transmissions, tires, and chassis.

• For trucks that do not qualify for preferential tariff treatment under the United States-Mexico-Canada Agreement (USMCA), the tariff will apply to the full value of the vehicle.
• For trucks that do 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.
• USMCA-compliant truck parts will not be subject to the imposed 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.

The announcement allows manufacturers to offset 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.

To harmonize the rebate credit process of the truck industry with the automobile industry, the President has granted an extension on the program for automobile manufacturers through 2030. The rebate credit process was initially scheduled to end on April 30, 2027. Automakers will be able to offset a portion of tariffs on automobile parts equal to 3.75% of the MSRP of automobiles they assemble in the United States. The administration will also create a similar rebate program for medium- and heavy-duty truck engine manufacturers based on the value of medium- and heavy-duty truck engines assembled in the United States.

Products subject to these new tariffs will not be subject to additional or existing sectoral tariffs on steel, aluminum, copper, automobiles and automobile parts, and lumber. They also will not be subject to reciprocal tariffs or the tariffs imposed on Canada, Mexico, Brazil, or India.

Why it matters:  In April, the U.S. Department of Commerce initiated an investigation into "The Effect of Imports of Medium-Duty Trucks, Heavy-Duty Trucks, and Medium- and Heavy-Duty Truck Parts on the National Security" under Section 232. The President's announcement follows the completion of this Section 232 investigation, which found that imports of medium- and heavy-duty trucks, truck parts, and buses threaten to impair the national security of the United States.

ATD submitted a comment opposing the imposition of additional tariffs on truck manufacturers and the impact that higher truck costs will have on the industry. ATD's comment explained that the trucking industry in recent months has faced (i) new tariffs that increased costs, (ii) decreased sales, (iii) the loss of manufacturing jobs, and (iv) a clouded economic outlook.

The announcement extends a key benefit that allows automakers to reduce what they pay in tariffs on imported auto parts that are used to build vehicles assembled in the United States. Domestic automakers have raised concerns that recent trade deals with countries, such as Japan and the United Kingdom, gave foreign automakers a cost advantage worth thousands of dollars per vehicle.

What's next:  The new tariff will apply to imported trucks and truck parts beginning on November 1. NADA and ATD will keep its members up to date on significant developments impacting the industry, especially any additional guidance from the administration. NADA and ATD will continue its advocacy efforts with the administration emphasizing the effect tariffs have on truck costs, impact to truck sales, and dealership viability.