On Thursday, U.S. Customs and Border Protection released guidance clarifying that auto parts from Canada and Mexico will escape the 25 percent tariff on U.S. vehicle imports set to begin this Saturday. Parts that comply with the Canada–U.S.–Mexico Agreement (CUSMA) will not face the extra duty, while other imported components and non-U.S. parts in vehicles completed outside the United States remain subject to the levy.
Tariff Relief for CUSMA-Compliant Parts
The U.S. tariff, announced last month by President Donald Trump, slapped a 25 percent duty on all vehicle imports to bolster domestic manufacturing. Under the new guidance, any component that meets CUSMA’s origin rules—such as a minimum of 75 percent North American content—will be exempt. This carve-out aims to preserve the integrated supply chains that span factories from Ontario to Monterrey.
Why It Matters for Businesses and Consumers
Industry analysts estimate that North American auto parts trade tops $150 billion annually, with Canada and Mexico supplying nearly half of U.S. demand. By exempting CUSMA-compliant parts, automakers can keep production lines moving without sudden cost hikes, potentially shielding drivers from sharper price spikes on new vehicles.
Cross-Border Supply Chains in Focus
For entrepreneurs and startups in the auto-tech sector, stable trade rules mean clearer investment signals. “This exemption preserves the rhythm of just-in-time manufacturing,” says a supply‑chain strategist in Detroit. It also underscores how deeply intertwined the three economies have become since the pact replaced NAFTA in 2020.
Looking Ahead
While this exemption offers relief, all other auto parts—and any non-U.S. components in passenger vehicles finished abroad—will face the tariff from 12:01 a.m. on May 3. As trade tensions evolve, businesses and policy watchers will be monitoring whether additional carve-outs or adjustments emerge before the next round of levies.
Reference(s):
Canadian, Mexican auto parts get Trump tariff exemption under CUSMA
cgtn.com
