US Tariffs on Automobiles & Parts

What This Covers

The automobiles and parts surcharge covers passenger cars, light trucks, auto parts, tires, and electric vehicle components classified under HTS chapter 87. The US auto tariff structure features a notable split: passenger cars face a 2.5% base rate while light trucks carry a 25% rate under the longstanding Chicken Tax. The USMCA imposes a 75% regional value content requirement for duty-free treatment. After the Supreme Court struck down IEEPA reciprocal tariffs on February 20, 2026, all auto-exporting countries face a uniform 10% Section 122 tariff (effective February 24, 2026, expiring ~July 24, 2026). Separately, Section 232 tariffs of 25% on steel and aluminum auto components remain fully in effect.

Most Affected Countries

China remains the most heavily penalized, with Chinese-made electric vehicles facing a combined tariff rate exceeding 100% due to Section 301 surcharges (which were unaffected by the SCOTUS ruling) layered on top of the 10% Section 122 tariff, effectively blocking them from the US market. Mexico and Canada, as USMCA partners, can still achieve duty-free treatment for vehicles meeting the 75% North American content rule, bypassing Section 122 entirely. Japan, South Korea, and Germany — which had faced varying IEEPA reciprocal rates — now all pay the same 10% Section 122 tariff on top of the 2.5% base passenger car duty, leveling the competitive field among non-USMCA auto exporters.

How Surcharges Stack

Auto tariff stacking has been simplified by the uniform 10% Section 122 rate. A Japanese sedan now faces the 2.5% base rate plus the 10% Section 122 tariff, totaling roughly 12.5% — the same rate facing German, Korean, and all other non-USMCA imports. A Chinese-made EV faces the 2.5% base rate, Section 301 surcharges pushing toward 100%, and the 10% Section 122 tariff, keeping Chinese EVs effectively locked out. USMCA-compliant vehicles from Mexico and Canada enter duty-free, but vehicles failing the 75% regional value content threshold face the full 2.5% base rate plus the 10% Section 122 tariff. Light trucks from non-USMCA countries face the 25% Chicken Tax as the base rate plus the 10% Section 122 tariff. Section 232 tariffs of 25% on steel and aluminum components remain in force regardless of origin, adding cost to vehicles with significant metal content.

Sourcing Strategies

USMCA compliance remains the dominant strategy for automakers, as duty-free treatment for vehicles and parts moving between the US, Mexico, and Canada provides a clear advantage over the 10% Section 122 tariff facing all other origins. The uniform 10% rate has eliminated the tariff-driven incentive to prefer Japanese over German or Korean vehicles, allowing automakers to optimize manufacturing footprints based on logistics, labor costs, and supply chain efficiency rather than tariff differentials. Companies should plan for Section 122's expiration around July 2026, which could temporarily eliminate the surcharge on non-USMCA imports. Section 232 steel and aluminum tariffs will persist regardless, so sourcing metal components from domestic suppliers or USMCA partners remains important for cost management.