New U.S. Tariff Measures on Medium and Heavy Duty Vehicles, Parts & Buses
U.S. PRESIDENTIAL PROCLAMATION, October 17th 2025
Below is a summary of U.S. Presidential Proclamation dated October 17th, 2025. To review the complete Proclamation, please click on the link below.
Background
Secretary of Commerce Critical Assessment
The Secretary of Commerce recently delivered a critical assessment revealing how foreign imports of medium and heavy-duty vehicles pose significant threats to America’s national security.
- Essential Infrastructure at Risk: Heavy-duty trucks transport over 70% of America’s freight, including vital supplies like food, fuel, and medical equipment that keep our nation running
- Military Readiness Compromised: These vehicles are crucial for Department of War operations, enabling transport of personnel, weapons systems, and critical military supplies
- Dramatic Foreign Dependency: Import penetration has reached a staggering 43% overall, with Class 8 heavy trucks hitting 50% foreign dependency – a sharp decline from America’s manufacturing dominance through the 1990s
- Vulnerable Supply Chains: The U.S. relies heavily on foreign suppliers for critical components including engines, batteries, transmission shafts, and castings, creating dangerous vulnerabilities
- Emergency Response Threatened: These vehicles support medical, law enforcement, and disaster relief operations through mobile coordination and evacuation capabilities
- Bus Industry Concerns: Significant overlap exists between truck and bus manufacturing, with buses being vital for military troop movements and government disaster response
Secretary of Commerce Recommendations:
In light of the Secretary of Commerce findings, the following has been recommended:
- Recommended Tariff Rates:
- 25% ad valorem duty on MHDVs and key MHDVPs
- 10% ad valorem duty on buses
- Integration with existing section 232 automobile tariff program
- Market Share Goal: Long-term stabilization of U.S.-produced MHDVs at approximately 80% market share to achieve national security objectives.
- Anti-Circumvention Measures: A process will be established to identify and impose tariffs on additional MHDVPs to prevent circumvention and ensure the action’s effectiveness in eliminating national security threats.
Presidential Decision
After reviewing the Secretary’s report and relevant factors, the President concurred with the national security threat finding and approved the tariff system implementation.
- Tariff Alignment: Government will conform tariff systems between automobile and medium/heavy-duty vehicle industries due to overlapping suppliers
- National Security Focus: Changes aim to address national security threats identified in previous proclamations from 2019 and 2025
- Legal Authority:
- Section 232 allows President to adjust imports that threaten national security
- Section 604 of Trade Act authorizes tariff schedule modifications
- Rationale: Coordinated approach will more effectively protect against identified security risks across both vehicle sectors
- Impact: Affects imports of automobiles, auto parts, medium/heavy-duty vehicles, and buses
Presidential Proclamation: New Tariffs on Heavy-Duty Vehicles
President Trump announced new tariffs on imports of Medium and Heavy-Duty Vehicles (MHDVs) and their parts, citing national security concerns
- 25% tariff rate will apply to most heavy-duty vehicles and parts, while buses get a reduced 10% rate under a specific classification
- Effective date: November 1, 2025 at 12:01 a.m. Eastern Daylight Time – tariffs will continue indefinitely unless modified or terminated
- USMCA benefits available: Vehicles from Mexico and Canada that qualify under the trade agreement may receive preferential treatment
- U.S. content matters: For USMCA-qualifying vehicles (except buses), importers can document U.S.-made components to reduce tariff burden – the 25% rate applies only to non-U.S. content value
- Parts get delayed implementation: Individual vehicle parts qualifying under USMCA won’t face tariffs immediately – the government will establish a separate process and publish guidelines later
- No exemption for knock-down kits: Complete vehicle kits and part compilations must pay the full tariff rate regardless of USMCA status
Import Adjustment Offset Program for Vehicle Manufacturers
- Main Goal: Reduce import duties on medium and heavy-duty vehicle parts (MHDVPs) that represent 15% of a vehicle’s total value
- Timeframe: Program runs from November 1, 2025, through October 31, 2030
- Offset Rate: Manufacturers can receive 3.75% of their total US-assembled vehicle value as import duty credits
Eligibility Requirements
- US Assembly Requirement: Only vehicles that undergo final assembly in the United States qualify for the program
- Authorized Users: Import duty credits can only be used by importers specifically authorized by the manufacturing company
- Annual Determination: The Secretary will calculate each manufacturer’s offset amount yearly based on their US assembly volume
How the Program Works
- Application Process: Vehicle manufacturers must apply to the Secretary for their import adjustment offset amount
- Credit Usage: Offset credits can only be used to reduce tariff payments on the manufacturer’s own vehicle parts imports
- Calculation Basis: The 3.75% rate reflects the total duty that would apply when a 25% tariff is imposed on parts worth 15% of a vehicle’s value
Special Provisions
- Engine Manufacturers: A separate but equivalent program will be established for companies that assemble vehicle engines in the US
- • Same Benefits: Engine manufacturers will receive the same 3.75% offset rate based on their US engine assembly value
Important Restrictions
- Knock-Down Kits Excluded: Pre-assembled vehicle kits and similar part compilations are not eligible for import offsets
- National Security Override: The Secretary can suspend the program for specific products if it conflicts with national security interests
- Federal Register Notices: Any program changes or suspensions will be published publicly for transparency
Flexible Tariff Classification
- Importers can choose whether to classify auto parts under automobile tariffs or MHDV tariffs
- This flexibility allows businesses to optimize their import costs
- Parts must be used for U.S.-based production or repair activities
Tariff Regulations Summary: Medium and Heavy-Duty Vehicles
- Import Adjustment Offset Program: The Secretary must implement a program allowing eligible importers to receive offsets against their tariff obligations. Customs and Border Protection (CBP) will administer these offsets using existing operational frameworks, either by applying credits against current tariff payments or through other approved methods.
- Penalties for False Declarations: If importers overstate U.S. content in their vehicles to avoid tariffs, severe consequences apply. A 25% tariff will be imposed on the full vehicle value, regardless of actual U.S. content. This penalty extends to all similar vehicle models from the same importer until CBP verifies compliance.
- Expansion Authority: The Secretary can add new vehicle parts to the tariff list after monitoring import patterns and assessing national security threats. This process may include input from domestic manufacturers and other interested parties, ensuring the tariff system adapts to changing market conditions.
- Foreign Trade Zone Requirements: Products subject to these tariffs entering U.S. foreign trade zones must be admitted under “privileged foreign status” rather than domestic status. This ensures proper tariff collection when goods enter the U.S. market for consumption.
- Multiple Tariff Rules: When products face multiple tariffs simultaneously, the same “stacking” rules apply as outlined in previous proclamations. Importantly, products remain subject to these regulations even when tariffs aren’t immediately payable due to trade agreement benefits, offset adjustments, or origin rule compliance.
- Vehicle Age Exemption – Classic vehicle protection: Tariffs do not apply to MHDVs or buses that are at least 25 years old at the time of import • This exemption helps preserve access to vintage and collector vehicles
- Tariff Reductions Available: The Secretary of Commerce can reduce tariffs by up to 50% for Canadian and Mexican steel/aluminum producers who supply U.S. automobile manufacturers, but rates cannot drop below 25%
- Eligibility Requirements: Reduced tariffs apply only to materials that:
- Qualify for USMCA preferential treatment
- Were smelted/cast or melted/poured in Canada or Mexico
- Support newly committed U.S. production capacity
- Eligibility Requirements: Reduced tariffs apply only to materials that:
- Manufacturing Drawback Changes: Only specific types of drawback claims under sections 313(a) and 313(b) of the Tariff Act will be permitted for duties on vehicle parts
This proclamation overrides any conflicting provisions from previous proclamations and executive orders, establishing clear legal precedence for the new tariff policies.
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