The Trump Administration has expanded the scope of US trade protection measures, introducing new Section 232 tariffs on medium- and heavy-duty vehicles (MHDVs), including trucks, buses, and related components. According to the US Department of Commerce, the decision addresses national security concerns arising from increasing import dependence in these critical industries. The administration concluded that reliance on foreign suppliers has weakened domestic manufacturing capacity essential for military logistics, emergency response, law enforcement, and infrastructure operations.
New tariffs reshape the US heavy-vehicle industry
Under the new order, MHDVs, including Class 3 to Class 8 vehicles such as large pickup and box trucks, and components such as engines, transmissions, and tires, will face a 25 per cent tariff from November 1, 2025.
Buses, including school, transit, and motor coaches classified under HTSUS 8702, will be subject to a 10 per cent tariff. Vehicles that are 25 years old or older are exempt from tariff.
The tariffs are intended to strengthen US manufacturing capacity and reduce exposure to supply disruptions. Domestic producers will also be able to request the inclusion of additional MHDV parts within the tariff scope, similar to previous Section 232 cases.
USMCA alignment and incentives for local assembly
The proclamation includes provisions consistent with the United States–Mexico–Canada Agreement (USMCA). Importers of qualifying USMCA-origin MHDVs (excluding buses) can submit documentation showing the proportion of US content in each model. In such cases, the 25 per cent tariff will apply only to the non-US portion of the vehicle’s value.
Knock-down kits for MHDVs will remain fully subject to the additional duty, regardless of USMCA status. Parts qualifying under the trade pact will remain temporarily exempt until US Customs and Border Protection (CBP) finalises its method for calculating non-US content.
To support US-based assembly, the administration introduced an import adjustment offset that allows manufacturers to reduce tariff liabilities by up to 3.75 per cent of the total value of vehicles assembled domestically. This programme will operate from November 1, 2025, through October 31, 2030, and applies to engine producers as well.
The offset will not apply to knock-down kits or similar part compilations, and the Department of Commerce retains the authority to revoke offsets that conflict with national security objectives.
How the new tariffs align with existing trade measure
The proclamation explains that products covered by Section 232 tariffs on automobiles or MHDVs do not incur additional duties under other Section 232 measures or tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
An exception applies to the IEEPA fentanyl-related tariff on China, which remains in force. Even where no additional duty is owed because of exemptions or offsets, products will still be considered “subject to” the proclamation, meaning they remain covered by its legal provisions and excluded from overlapping tariffs.
This clarification follows the existing interpretation of “subject to,” which can indicate either inclusion under the rule or the imposition of a duty greater than zero, depending on the context.
Automakers deepen US investments to reduce tariff impact
Hyundai Motor Group has pledged between USD 21 billion and USD 26 billion for its plants in Alabama and Georgia. The funding expands output of electric vehicles and supports domestic steel manufacturing, giving the company more control over materials and reducing dependence on imported components.
General Motors (GM) expects around a USD 5 billion tariff hit in 2025 but is expanding its American assembly lines and increasing the share of US-made parts to lessen that burden. GM is making use of tariff offsets available for vehicles assembled domestically and is focusing on factory efficiency and process improvements to protect profits.
Ford Motor Company continues to add capacity at US sites and adjust its supplier network toward local producers. Chief Executive Jim Farley said the company’s net tariff exposure for 2025 is roughly USD 1 billion, less than earlier projections, helped by credit programmes linked to American assembly.
Tesla is expanding production at its US Gigafactories and relying more heavily on domestic parts. This localisation strategy limits tariff exposure and strengthens Tesla’s position in the US electric-vehicle market, which continues to grow rapidly.
Stellantis is investing about USD 10 billion in new and upgraded American facilities while pressing for tariff relief through policy discussions. Alongside that, the company is reorganising supply chains and adjusting production schedules to keep costs contained under the new trade rules.
Toyota Motor Corporation is broadening sourcing within the USMCA region, using suppliers in Canada and Mexico that qualify for tariff exemptions. It is also applying for tariff exclusions on several critical components, a step aimed at cutting expenses and raising US content in finished vehicles.
American Axle & Manufacturing (AAM) has spent more than USD 130 million upgrading its Michigan operations, backed by state and federal incentives. The company chose to build up its US footprint rather than shift production to Mexico, aligning with the broader industry trend of strengthening domestic manufacturing to cushion tariff effects.
Tariff adjustments for steel and aluminium
The proclamation also includes tariff adjustments for steel and aluminium producers in Canada and Mexico that supply US manufacturers of automobiles and MHDVs. Eligible producers can receive up to a 25 per cent reduction in existing Section 232 metal tariffs, provided the materials are smelted and cast (for aluminium) or melted and poured (for steel) in Canada or Mexico.
The reduction applies only to volumes supporting new US manufacturing capacity, and only to imports that qualify for USMCA preferential treatment. The measure is intended to promote supply chain coordination within North America’s industrial base.
Broader industrial policy context
The new proclamation represents a further extension of Section 232 authorities and integrates multiple trade instruments across the automobile, truck, steel, and aluminium sectors. The policy framework combines tariffs, offsets, and targeted exemptions to strengthen US production capacity and reduce reliance on foreign supply chains.
While the measures have been welcomed by some domestic producers and labour groups, importers and multinational manufacturers are expected to face additional compliance requirements and higher operational costs.
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