Medium- and Heavy Duty Trucks 25% Tariffs Begin Nov. 1; Buses at 10%
Section 232 tariffs on heavy- and medium-duty trucks and their parts and on buses will take effect Nov. 1, under a proclamation issued by President Donald Trump. Tariffs will be set at 25% for classes III through VIII trucks and their parts, and 10% on buses.
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There will be USMCA favorable treatment for eligible imports of affected trucks, meaning that the non-U.S. content will be subject to the 25% tariff, but the U.S. content will not be, according to a senior White House official, speaking on a background call with reporters.
Buses will not be available for preferential treatment under USMCA, which means "the entirety of the vehicle will be subject to the 10% tariff," the official said.
Truck and bus parts imported from Mexico or Canada will come in duty-free, as long as they meet USMCA rules of origin. The Commerce Department eventually plans to charge a tariff on the non-U.S. value of these parts, as well as those destined for autos and light trucks, but has not yet come up with a methodology to do so.
For medium- and heavy-duty trucks assembled in the U.S., companies can get an offset of 3.75% of the manufacturer's suggested retail price of the finished vehicle, if there were tariffs paid on parts that add up to that amount (or more), just as is set out for cars and trucks. Heavy truck engine manufacturers, such as Cummins, also will be eligible for the 3.75% offset.
For all these domestic manufacturing operations, the offsets will remain at the current level through 2030, the proclamation says.
Another break for the sector is that aluminum or steel imported from Canada or Mexico, that was smelted and cast or melted and poured in those countries, and is used by car and truck manufacturers, can be subject to 25% tariffs, rather than 50% tariffs. However, the Commerce Secretary will limit that break to the amount of metals that announced expansions in the U.S. are expected to produce. That break is also available to heavy truck and bus manufacturers.
The new tariffs will apply to used and remanufactured trucks and buses, but only if they were manufactured in the last 25 years.
If there are Japanese or European truck parts or heavy-duty engine parts that are being imported, those parts will be subject to a 15% all-inclusive rate, rather than the 25% rate.