Auto Tariffs Arrive
On Wednesday, the President released a Presidential Proclamation imposing a 25% tariff on auto imports starting April 3 and on auto parts beginning May 3, with no duty drawback available. Automakers can reduce tariff liability on USMCA-qualifying vehicles by documenting U.S. content, but inaccuracies will trigger full retroactive tariffs. For auto parts under USMCA, the tariff is delayed until Commerce and CBP establish an enforcement process. The Federal Register has not yet posted the material indicating the impacted HTS codes, but an inclusion process for parts will be set up by June 24.
The tariffs, justified under Section 232 national security grounds, have sparked global backlash, with the EU, Japan, and South Korea considering responses. Domestic reactions are mixed, with UAW supporting the move while automakers warn of higher prices and job losses. Tesla and foreign luxury brands have announced that they expect significant cost impacts. Specific to Canada, President Trump and Canadian Prime Minister Mark Carney held their first conversation today, a day after Carney declared Canada’s traditional relationship with the U.S. was over. While Trump called the discussion “extremely productive,” tensions remain high as Trump’s new 25% auto tariffs on Canada take effect on April 2, prompting Canada to prepare retaliatory trade actions.
Venezuelan Oil Tariffs Enacted
On March 24, President Trump signed an executive order imposing a 25% tariff on all goods imported into the United States from countries that purchase Venezuelan oil, either directly or indirectly, effective April 2. These tariffs will be in addition to any existing duties and will expire one year after the country ceases importing Venezuelan oil unless an earlier termination is deemed appropriate by U.S. officials. The measure aims to pressure the Venezuelan government by discouraging international purchases of its oil. Major importers like China and India are expected to be significantly impacted, potentially leading to disruptions in global oil markets. In response, China has condemned the U.S. action, urging the withdrawal of these measures to foster peace and stability. Additionally, oil loading at Venezuela's ports has slowed amid the impending tariffs and the termination of related licenses.
What’s Coming Next Week?
The April 1 release of trade reports from USTR, Commerce, and Treasury sets the stage for April 2, dubbed "Liberation Day," when the Trump Administration will impose immediate, targeted reciprocal tariffs under emergency economic authority, with a focus on a "Dirty 15" list of countries. While initial reports suggested no sectoral tariffs, Trump later announced investigations on copper and lumber and hinted at future tariffs on chips and pharmaceuticals, emphasizing a “lenient” but largely exemption-free approach. The Administration is also considering long-term trade investigations and further actions under Sections 301, 232, and 338. Meanwhile, USTR hearings on Chinese shipping fees and a potential fast-tracked copper tariff signal additional trade restrictions ahead.
The Michael Best Strategies team is monitoring these actions and will provide updates next week as more information is released.
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Are you concerned about the impacts of the outlined trade issues? Please contact Sarah Helton, Michael Best Strategies’ Trade Practice Lead at sarah.helton@michaelbest.com for assistance.