President Donald Trump complied on Wednesday with his threats to impose new tariffs on imported cars, saying that a 25% tax on the importation of vehicles not manufactured in the United States would enter into force next week.
On Wednesday, the administration was still making public the details of the plan, which aims to revolutionize automotive trade and supply chains. This is what is known so far.
25% of tariffs on all non -assembly cars in the US
Trump will impose a 25% tariff (which adds to the previous rights) to imports of vehicles finished from April 3.
The US base tariff rate for car imports is 2.5%.
Tariffs will apply to cars and trucks made in countries with free trade agreements with the United States, such as Canada, Mexico and South Korea. These countries will be seriously affected, as are Japan and car producers from the European Union, Germany and Italy, in addition to the United Kingdom.
Lee: 91% of automotive production in Mexico complies with Tmec: AMIA
Commerce and automotive experts claim that unilateral tariffs would violate the commercial agreement between the United States, Mexico and Canada and the Free Trade Agreement between the United States and South Korea.
25% delay in pieces of pieces
25% tariffs will also be applied to the main imports of auto parts, identified in Trump’s proclamation as “motors and parts of motors, transmissions and pieces of the propulsion system, and electrical components”.
However, tariffs on the pieces could begin up to a month later, with a date that will be set in an upcoming notice of the Federal Registry, but not after May 3.
The notice will also contain the specific tariff codes of the components subject to rights, which were not revealed in Trump’s proclamation.
Partial exemption of TMEC
The plan provides a partial exemption from tariffs for vehicles and auto parts that comply with the rules of origin of the TMEC, but only for the value of its US content.
Therefore, a truck manufactured in Mexico with 45% of American content would continue to be subject to a 25% tariff over 55% of its value.
The same concept would apply to auto parts that comply with the rules of origin of the TMEC: the non -American content is taxed.
Lee: Autartes that meet the TMEC will not be subject to tariffs, for now
But determining these content levels will be complicated. Until the Department of Commerce and the US Customs and Protection Agency determine a process to apply tariffs to its non -American content, auto parts that meet the TMEC will remain free of tariffs. A deadline for the process was not specified.
He will also try to overcome tariffs assembling car locally.
Legal foundation of the new tariffs
The new Trump tariffs are based on a 2019 national security investigation on cars imports carried out during its first presidential mandate under section 232 of the Commercial Expansion Law of 1962.
Trump previously used this commercial law of the Cold War era to impose 25% tariffs on steel and aluminum imports in 2018.
The Commerce Department discovered that the growing participation in the imported car market was negatively affecting the national security of the United States by eroding the American industrial base and the capacity of national automobile manufacturers to develop advanced technologies for military use.
Lee: ‘Free trade disaster’ ends: EU guild when applauding tariff to cars
Trump then decided not to impose tariffs and chose to negotiate with his business partners to remedy those concerns.
But on Wednesday he concluded that these conversations had failed, the threat to the security that imports had worsened and the TMEC and Korus reviews (free trade agreement between the United States and Korea) had not improved the position of the United States in automotive trade.
With Reuters information
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