A recently announced Trump Tariff won’t impact the automotive industry due to an existing trade agreement and White House statement.
New Trump Tariffs will have no impact on truck prices
The recently announced 15% tariffs, on the heels of a U.S. Supreme Court ruling stating the previous tariffs were illegal, is a “worldwide tariff.”
“I, as President of the United States of America, will be, effective immediately, raising the 10% Worldwide Tariff on Countries, many of which have been ‘ripping’ the U.S. off for decades, without retribution (until I came along!), to the fully allowed, and legally tested, 15% level,” Trump said in a social media post.
However, the White House later clarified the new tariffs won’t impact key materials and automotive companies.
A WhiteHouse.gov document on the proclamation, clarified the new tariffs won’t impact the automotive industry even some buses and medium-duty commercial trucks.
“Some goods will not be subject to the temporary import duty because of the needs of the U.S. economy or in order to ensure the duty more effectively addresses the fundamental international payments problems facing the United States, including:
- certain critical minerals, metals used in currency and bullion, energy, and energy products;
- natural resources and fertilizers that cannot be grown, mined, or otherwise produced in the United States or grown, mined, or otherwise produced in sufficient quantities to meet domestic demand;
- certain agricultural products, including beef, tomatoes, and oranges;
- pharmaceuticals and pharmaceutical ingredients;
- certain electronics;
- passenger vehicles, certain light trucks, certain medium and heavy-duty vehicles, buses, and certain parts of passenger vehicles, light trucks, heavy-duty vehicles, and buses;
- certain aerospace products; and
- informational materials (e.g., books), donations, and accompanied baggage.”
This means the new tariff won’t apply to the steel, aluminum and copper used in all new vehicles since these materials can’t be “produced in sufficient quantities.”
Plus, the White House document further added more exemptions:
- USMCA compliant goods of Canada and Mexico.
The USMCA is the United States-Mexico-Canada agreement that allows the flow of goods across those borders without tariffs.
It allows automakers to build trucks in Mexico and Canada. With this exemption, automakers won’t be forced to move production for these key products.
This is the primary agreement resulting in the growth of automotive parts built in Mexico as well as allowing automakers to build vehicles in Mexico and Canada to import into the U.S.
These goods had been exempt from the previous tariffs and the further exemption is seen as a win for automakers asking to keep the status quo on the USMCA.
What about truck parts?
One of the big questions is the impact on automotive parts. This is an especially hard hit area since most parts are imported into the U.S. to either be assembled on new vehicles or replacement parts.
According to another WhiteHouse.gov document, the De Minimis exemption is still in place and will impact some parts pricing.
This is where things get confusing.
De Minimis is an exemption on goods imported under $800 and was passed into law in 1938.
This would apply to auto parts as stated in a recent interview with a larger parts supplier on our YouTube channel.
Could that ultimately cause truck prices to rise? Possibly considering many parts like wiring harnesses being made in China, Japan and Ukraine.
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