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Auto parts compliant with USMCA are exempt from incoming tariffs
CDG News Alert (1 min. read)
Anna del Villar
May 02, 2025
Michigan engine assembly plant worker via Stellantis
Driving the news: Automakers are catching a break after U.S. Customs and Border Protection confirmed Thursday that imported car parts following United States-Mexico-Canada Agreement rules won't get slapped with 25% tariffs after all.
For context: President Trump also signed an executive order this week providing temporary relief to automakers by offering rebates to those finishing vehicles in the U.S. The order also prevents additional tariffs like steel and aluminum from stacking on top of the auto duties.
The wrench: Knock-down kits or parts compilations are excluded from the exemptions.
Why it matters: Industry insiders feared it would be extremely difficult and complicated to untangle which parts are “American enough” to dodge tariffs. See—auto parts cross borders multiple times during production, making it tough to track their origins accurately in the deeply integrated North American supply chain.
What we're watching: While this is a meaningful win for automakers, non-U.S. parts will still face the full 25% tariff starting at 12:01 a.m. May 3.
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