The 3.75% rate was calculated based on the application of the upcoming 25% tariff to vehicles made with at least 85% U.S. or USMCA content. Under this scenario, automakers would pay no tariffs on auto parts imports for the year, effectively providing relief during this period. The Commerce Department has 30 days to establish a process for automakers to submit documentation—covering domestic production plans, projected tariff costs, and importers of record—to claim the offsets.

Importantly, the new order does not alter existing tariffs on steel, aluminum, or other sectors. It also clarifies that tariffs on imports of steel, aluminum, cars, and non-USMCA-compliant goods will not stack on top of duties on auto parts. Additionally, vehicles and auto parts compliant with the USMCA remain exempt from the 25% tariffs, as the U.S. plans to tax only the non-U.S. content of those parts. The White House has indicated that a process for this will be in place by May 3, although an update has yet to be provided.

Meanwhile, Canada has begun allowing certain U.S.-assembled passenger vehicles and light trucks to be imported duty-free, easing some of the restrictions on cross-border trade. Industry groups and automakers have been urging the Trump administration for months to offer more leniency regarding tariffs targeting cars and parts, citing concerns over rising costs and supply chain disruptions.

While these measures provide some relief, the broader landscape remains complex as the administration continues to navigate trade policies affecting the automotive sector.