U.S. President Donald Trump has issued an executive order imposing a 25 percent tariff on imported medium- and heavy-duty trucks effective from Nov. 1. However, there is an exemption for vehicles traded under the Canada-U.S.-Mexico Agreement. Additionally, U.S. automakers will receive extended relief from tariffs on auto parts until 2030.
Under the revised action, a 3.75 percent rebate will be granted based on the sales price of domestically assembled vehicles. This rebate calculation involves applying a 25 percent import tax on parts that constitute 15 percent of a vehicle’s sales price, resulting in a 3.7 percent rebate. The rebate will now also be available to manufacturers of trucks and engines.
Trucks that comply with the CUSMA trade agreement will only face tariffs on their non-American parts. The latest tariffs will not impact auto parts that adhere to the North American trade pact at present. Furthermore, a 10 percent tariff will be imposed on buses and motorcoaches.
President Trump had previously threatened to impose tariffs on heavy trucks to safeguard American industry from external competition. These tariffs, applied under Section 232 of the Trade Expansion Act of 1962, target semi-trailers and large pickup trucks, aligning with the levies imposed on smaller vehicles earlier in the year.
The White House highlighted the importance of fortifying America’s ability to manufacture medium- and heavy-duty trucks and essential parts for military readiness, emergency response capabilities, and economic infrastructure. Despite this, the American Trucking Association has expressed opposition to the tariffs, citing concerns about potential price increases in an industry already impacted by steel and aluminum tariffs.
The North American automobile industry, deeply interconnected, sees many trucks manufactured in the U.S. with components sourced from other countries. While the effects of the new tariffs are expected to impact Mexico more significantly, some heavy- and medium-duty vehicle companies operate in Canada as well. For instance, Paccar, a producer of large commercial trucks, has divisions in Canada and recently initiated layoffs at its Quebec plant.
