Section 232 Automotive Tariffs: Issues for Congress
Changes from April 17, 2025 to May 14, 2025
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On March 26, 2025, President Donald Trump announced 25% tariffs on U.S. imports of automobiles and certain automobile parts under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862, as amended). On April 3, tariffs went into effect on vehicle imports from most trading partners, with limited exceptions for vehicles tradedTariffs went into effect for vehicles on April 3 and auto parts on May 3, with partial exceptions for goods complying with certain rules under the U.S.-Mexico-Canada Agreement (USMCA). Tariffs on auto parts are scheduled to go into effect on May 3.
Section 232 authorizes the President to impose trade restrictions—such as a tariff or quota—
Section 232 authorizes the President to take action if the Secretary of Commerce determines that imports of a good "threaten to impair" U.S. national security. President Trump imposed auto tariffs based on a 2019 Section 232 investigation, which concluded that U.S. auto imports were a threat to U.S. national security.
Congress may consider exercising its prerogatives over trade policy to monitorwhether to support, curb, or bolster oversight of Section 232 auto tariffs. Some key issues include positive and negative implications of auto tariffs for the U.S. economy, oversee U.S. commercerelationships with key auto trade partners, and legislate regarding presidential trade authoritiescongressional authorities over trade policy.
Background
In 2024, the United States imported 8.1 million vehicles ($248.8 billion), primarily from Mexico, the 27-member European Union (EU), Japan, South Korea, and Canada (see Figure 1). In 2024, these five partners collectively provided 94% of U.S. vehicle imports by value and 96% by quantity. As of 2023, foreign automakers have invested $109 billion in U.S. operations, and in 2023, produced 4.9 million vehicles (out of 10.3 million total) in the United States.
For most vehicles not traded under a comprehensive U.S. free trade agreement (FTA), which sets terms for reduced tariffs or duty-free trade among agreement parties, the United States has imposed a most-favored-nation (MFN) tariff of 2.5% on passenger vehicles and 25% on light trucks. The United States traded largely duty-free with Canada and Mexico under USMCA, and South Korea under the United States-Korea Free Trade Agreement (KORUS). Under KORUS, the U.S. light truck tariff is scheduled to phase outto be eliminated in 2041. The United States does not have a comprehensive FTA with Japan or the EU. Japan eliminated import tariffs on vehicles in 1978. The EU imposes a 10% MFN tariff on passenger vehicle importsvehicles and 22% on certain light trucks.
2025 Presidential Actions
In his first term, President Trump did not implement auto tariffs, but directed the Office of the U.S. Trade Representative (USTR) to pursue negotiations with trading partners, including Japan and the EU. In March 2025, President Trump stated and 22% on certain light trucks.
As part of USMCA negotiations during the first Trump Administration, the United States entered into side letters with Canada and Mexico providing that, for each of the countries, the United States would exclude certain amounts of vehicles and auto parts from potential Section 232 tariffs. The side letters also specified that automotive goods falling under this exclusion would be subject to either duty-free treatment under USMCA (if meeting USMCA rules) or the U.S. MFN rate applied on August 1, 2018.
March 2025 Presidential Proclamation
President Trump did not implement tariffs or other trade restrictions on automotive goods during his first term, but directed the Office of the U.S. Trade Representative (USTR) in 2019 to pursue negotiations with trading partners, including Japan and the EU. In his March 2025 proclamation on auto imports, President Trump stated that USTR's negotiations "did not lead to any agreements of the type contemplated by [S]ection 232." He stated that national security concerns "remain and have escalated" since the 2019 reportinvestigation, noting that "only about half" of vehicles sold in the United States are manufactured domestically, and the U.S. share of global automobile production has "remained stagnant." He asserted that USMCA and revisions to KORUS "have not yielded sufficient positive outcomes," and "investments resulting from other efforts, such as legislation," have also not been effective.
On April 29, President Trump issued guidance to prevent certain goods from being subject to multiple tariff actions. The following do not apply to goods subject to Section 232 automotive tariffs: Section 232 automotive tariffs are to be added to: TheIn March 2025, President Trump issued a proclamation mandatesmandating: (1) 25% tariffs on all vehicle imports effective April 3, 2025, with exemptions for the U.S. content of USMCA-compliant vehicles; and (2) 25% tariffs on certain automobile parts fromeffective May 3, 2025, with exemptions for USMCA-compliant auto parts until the Administration "establishes a process to apply the tariff exclusively to the value of the non-U.S. content" of such parts; and (3) the establishment of a process for including additional auto parts within the scope of the tariffs within 90 days of the proclamation date. The tariffs are in addition to other duties (e.g., MFN tariffs), except for 10% tariffs on nearly all goods and trading partners from April 3 and country-specific tariffs announced on April 2 that are under suspension. The proclamation does not address USMCA side letters.
President Trump also announced a two-year "import adjustment offset" applicable to Section 232 duties on auto parts. President Trump asserted that this would "more effectively eliminate" the threat to U.S. national security. An auto manufacturer may apply for an offset equal to 3.75% of the aggregate Manufacturer's Suggested Retail Price (MSRP) value of all its vehicles assembled in the United States from April 3, 2025 to April 30, 2026. The following year, the offset is to decrease to 2.5%. The Commerce Secretary is to issue regulations and procedures related to the offset's implementation.
The White House argues that tariffs could reduce auto imports and strengthen the U.S. industrial base. Some groups, such as labor unions, support the auto tariffs. Some observers, including groups representing U.S. and foreign automakers cautionedAuto industry groups have cautioned that tariffs could negatively affect the U.S. auto industry, as well as U.S. manufacturers and consumers. Such groups also warn about potential retaliation. To date, onlyeconomy, and they have supported the abovementioned efforts to mitigate the effects of tariffs on the auto industry. Such groups have also warned about potential retaliation from trading partners. For example, Canada has retaliated and disputed the tariffs at the World Trade Organization (WTO).
Issues for Congress
Congress is deliberating whether to support, curb, or bolster oversight of Section 232 auto tariffs. Some Members assert that tariffs could increase revenues and bolster U.S. manufacturing investment, with some advocating for expanding presidential trade authorities (e.g., H.R. 735). Others call for limiting presidential tariff authorities (e.g., 119th Congress, S. 1272/H.R. 2665, H.R. 1903), asserting that Congress should play a stronger role in setting and approving U.S. trade policy.
Some Members have called for exemptions for certain products or countries, like those previously in place for other tariff actions, to mitigate potential impacts on the U.S. economy. President Trump has argued that exemptions may "undermine" the objectives of tariffs.
Others favoring oversight call for commissioning a report on the potential economic benefits and costs of tariffs, including on the auto sector (e.g., S. 959, H.R. 2287). Other oversight proposals include urging Congress to require a new/updated Section 232 investigation before determining whether to support or oppose auto tariffs.