U.S. President Donald Trump has issued an executive order imposing a 25% tariff on medium- and heavy-duty trucks imported into the country starting November 1. However, vehicles traded under the Canada-U.S.-Mexico Agreement will be exempt from this tariff. Additionally, American automakers will receive extended relief from tariffs on auto parts until 2030.
Under this amended action, a 3.75% rebate will be granted based on the sales price of domestically assembled vehicles. This figure is calculated by applying a 25% import tax on parts constituting 15% of a vehicle’s sales price, resulting in a 3.7% rebate. The rebate will now also be available to manufacturers of trucks and engines.
Trucks compliant with the CUSMA trade agreement will only face tariffs on their non-American parts. Auto parts compliant with the North American trade pact will not be subject to the latest levies at this time. Moreover, a 10% tariff will be imposed on buses and motorcoaches.
The decision to impose heavy truck tariffs was made using Section 232 of the Trade Expansion Act of 1962, targeting semi-trailers and large pickup trucks. This move aligns with previous tariffs imposed on smaller automobiles earlier this year. The White House emphasized that these tariffs aim to strengthen America’s ability to manufacture medium- and heavy-duty trucks and essential parts, crucial for military readiness, emergency response, and economic infrastructure.
Despite the administration’s intentions, the American Trucking Association has expressed concerns about the potential price hikes in an industry already impacted by steel and aluminum tariffs. The association highlighted the industry’s thin profit margins and past challenges, stating that heavy-duty truck imports do not pose a national security threat.
The interconnected nature of the North American automobile industry means that the impact of these tariffs may be more significant in Mexico, although some companies with heavy- and medium-duty operations also exist in Canada. For instance, Paccar, a major producer of commercial trucks, has operations in Canada and recently laid off workers at its plant in Ste-Therese, Quebec.
Overall, the decision to implement these tariffs reflects Trump’s efforts to shield American industries from what he perceives as unfair competition from overseas.