During an executive order signing session in the White House today, President Trump announced a major change in tariffs on the auto industry. [Full Executive Order Here]
The 25% import duty applies on top of any preexisting tariff for cars and light trucks. The 25% tariff also applies to imported car parts. The USMCA trade agreement between the U.S. Canada and Mexico still applies.
If the content of a car assembled in Mexico/Canada contains 50 percent component parts from the USA, the 25% tariff only applies to the final value of the imported components. In this example the tariff rate would be 12.5% of the total value.
The tariff applies to all imported cars and light trucks. Approximately half of all cars sold in the USA are currently American made, the other half are import vehicles from mainly Mexico, Japan, South Korea, Canada and Germany.
This is a very big kick in the teeth to Germany. Previously in a long-term strategy to avoid U.S. tariffs, German automakers invested billions in auto assembly plants in Mexico. Ex. the BMW parts were shipped from Germany and the cars assembled in Mexico. Now that investment is worthless as the vehicle will be taxed at a rate of 25% regardless of whether it is assembled in Germany or Mexico.
Ex.2 High end auto Mercedes currently builds SUVs in the USA in order to avoid the previous 25% tariff; however, they still build cars outside the USA and export them into the USA market. This will likely change quickly, and Mercedes will begin building all cars and SUVs in the USA.




