USMCA Auto Parts Free From Trump’s Tariffs

In the weeks since tariffs announced by the Trump administration threw γλοβαλ economies into disarray, amendments and refinements have been made to the measure, providing certain industries with some much-needed air to breathe. This includes many automotive parts suppliers that can qualify for an exemption. Had this change not been made, it could have upset the industry even further.

Through the updated tariff regime, components that are compliant with the United States-Mexico-Canada Agreement (USMCA) are being spared the 25% duty applied to other parts. This is despite Trump previously suggesting the non-US value of parts would be subject to a 25% tariff at a later date, now confirming that the current 0% duties will remain in place.

Read: Trump’s Tariffs Set To Cut Global Production By 1.5M Vehicles

According to Bloomberg, changes confirmed earlier this week allow auto industry companies to apply for an offset against parts tariffs for two years. This policy has been put in place to give them enough time to shift parts production to the United States.

Mexico is pleased with the USMCA exemption, as it is the largest importer of auto parts into the United States. Mexican President Claudia Sheinbaum described the exemption as “good news,” adding that she continues to work together with President Trump and “keeps getting better conditions compared to what the situation was previously.”

“There’s a preferential treatment for everything that is produced within the trade agreement, and in particular for auto parts, which have zero tariffs,” she added.

Of course, the US President continues to slap imported vehicles themselves with 25% tariffs in a bid to encourage car manufacturers to build more of their vehicles in the United States. While several brands say they will increase capacity in the United States, the prices of new and used vehicles are expected to rise across the country as dealers work through pre-tariff inventory.