Tax insight

New US Section 232 automotive tariffs drive strategic realignment for OEMs and suppliers

Insight
8 minute read
November 13, 2025

What happened?

President Trump issued a Presidential Proclamation under Section 232 on October 17 finding that imports of medium- and heavy-duty vehicles (MHDVs), certain vehicle parts, and buses threaten to impair US national security. Beginning November 1, ad valorem duties, including a 25% tariff on most MHDVs and certain parts, and a 10% tariff on buses, took effect.

The Proclamation also impacts the automobile industry, as these new tariffs present an opportunity for auto importers to strategically assess their import profile and potentially benefit from the varying regimes that apply under the new tariff system. It updates the duty and offset framework for US vehicle and engine manufacturers through 2030 and creates a new process allowing importers to designate qualifying parts under either the automobile or MHDV tariff system. These changes are intended to provide consistent tariff treatment across related vehicle supply chains and to strengthen measures aimed at addressing national security risks associated with vehicle imports. The Proclamation further specifies that entries filed under this framework are not subject to concurrent Section 232 duties on steel, aluminum, copper, or their derivative products established under prior proclamations.

Why is it relevant?

These tariffs create both challenges and opportunities across the automotive value chain. While it imposes new duties on MHDVs, certain parts, and buses, it also updates the tariff and offset framework for the automobile industry. The new structure allows original equipment manufacturers (OEMs) and engine producers to apply offsets against certain duty liabilities and introduces flexibility for importers to designate qualifying parts under either the automobile or MHDV tariff systems. These mechanisms enable OEMs to allocate portions of their offsets or credits to suppliers, requiring coordinated management of duty exposure across complex supply chains. The Proclamation is reshaping how OEMs and suppliers collaborate on trade, finance, and operational strategy, while creating potential refund opportunities through retroactive re-declarations, post-summary corrections, or offset credit applications.

Actions to consider

Automotive manufacturers should move quickly to identify eligible imports and assess whether re-declaration or offset use under the new framework could generate duty refunds or credit savings. OEMs should develop clear frameworks for allocating offsets to suppliers and establish controls so that suppliers apply them only to qualifying imports. Both OEMs and suppliers will need robust data management, post-entry review processes, and cross-functional coordination between trade, finance, and accounting teams to manage compliance, capture refund opportunities, and prepare for longer-term operational impacts across the integrated vehicle supply chain.

For more details, please read the full Tax Insight linked below.