Price on Trade: Auto tariffs, auto parts, and Hyundai – a world of rapid changes

On March 26, 2025, President Trump announced that the United States would impose an additional 25% import duty on automobiles and automobile parts, using authority under Section 232 of the Trade Expansion Act of 1962. The new duties will apply to passenger vehicles (including sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans), light trucks, and certain automobile parts (including engines and engine parts, transmissions and powertrain parts, and electrical components). According to the president’s executive order, the new duties will become effective on April 3, 2025, for passenger vehicles and light trucks and no later than May 3, 2025, for auto parts.

The new tariffs build and rely on a Section 232 investigation conducted by the US Department of Commerce during the first Trump administration. Following a 2018-2019 investigation into the national security impacts of US automotive imports, in a February 2019 report, Commerce concluded that imports impaired the ability of the domestic automotive industry to meet national defense requirements and otherwise threatened to impair national security. The agency suggested several courses of action that the United States might take to counter these threats, including additional tariffs on passenger vehicles, light trucks, and parts. According to the newly issued executive order, Commerce has informed the president that the concerns underlying the 2019 report continue to persist.