U.S. President Donald Trump has issued an executive order imposing a 25% tariff on medium- and heavy-duty trucks imported starting November 1. However, trucks traded under the Canada-U.S.-Mexico Agreement (CUSMA) are exempt from this tariff. Additionally, American automakers will receive continued relief from tariffs on auto parts, with the rebate extended until 2030.
The revised action offers a 3.75% rebate based on the sales price of domestically assembled vehicles. This calculation stems from applying a 25% import tax to parts representing 15% of a vehicle’s sales price, resulting in the 3.75% rebate. The rebate will now be available for manufacturers of trucks and engines as well.
Trucks complying with the CUSMA will only face tariffs on non-American parts, while auto parts adhering to the North American trade pact are currently unaffected by the latest levies. Moreover, a 10% tariff will be imposed on buses and motorcoaches.
The decision to implement heavy truck tariffs was made using Section 232 of the Trade Expansion Act of 1962. This move, targeting semi-trailers and large pickup trucks, aligns with previous tariffs imposed on smaller vehicles earlier in the year. The rationale behind these measures, according to the White House, is to bolster America’s manufacturing capacity for medium- and heavy-duty trucks and essential parts, crucial for military readiness, emergency response, and economic infrastructure.
Despite this, the American Trucking Association has expressed concerns over the potential for increased prices in an industry already grappling with steel and aluminum tariffs. The association highlighted the industry’s narrow profit margins and the challenges faced due to falling rates and rising operational costs.
The impact of these tariffs is expected to be more significant in Mexico, although some companies producing heavy- and medium-duty vehicles have operations in Canada. For instance, Paccar, a major producer of commercial trucks, has facilities in Canada and recently laid off workers at its plant in Ste-Therese, Quebec.
Overall, these tariffs are part of a broader strategy by the Trump administration to protect American industries from what is perceived as unfair competition from abroad.