Starting April 2, the U.S. will implement a 25% tariff on imported passenger vehicles, light trucks, and key automobile parts such as engines and transmissions.

Starting April 2, the U.S. will implement a 25% tariff on imported passenger vehicles, light trucks, and key automobile parts such as engines and transmissions. This move, part of President Trump's "Liberation Day" plan, has caused significant concern within the car industry, especially given the decades of integrated supply chains with Canada, Mexico, and other countries.

The complexity of tracking a vehicle's "Made in America" status has led to surprising results. Some foreign companies, like Honda in Alabama and Toyota in Kentucky, produce cars that may be more "American" than those made by Ford, General Motors, and Stellantis. Even Tesla, with its U.S. assembly facilities, sources many key parts globally.

The new tariff order does acknowledge these complexities. It ensures that USMCA-compliant auto parts will remain tariff-free, and importers will have the chance to certify the U.S. content of their vehicles. Tariffs will only apply to the non-U.S. parts once the Secretary of Commerce, in consultation with U.S. Customs, establishes a process.