The North American automobile industry has been under intense pressure due to the imposition of tariffs by the US government, but a recent announcement by US Customs and Border Protection has brought some relief. Background
The US has imposed a 25% tariff on all vehicle imports from the US, Canada, and Mexico. However, the Trump administration has made a carve-out for American-made parts of cars that comply with the Canada-US-Mexico Agreement (CUSMA). The exemption does not apply to automobile knock-down kits or parts compilations. Industry Reactions
The Big Three automakers – Ford, General Motors, and Stellantis – have been lobbying the Trump administration for months, citing the potential for higher prices and devastating effects on the industry. *Ford, General Motors, and Stellantis have collectively warned the administration that the duties would drive up prices and devastate the North American industry. *General Motors CEO Mary Barra has warned that the tariffs could cost the company up to $5 billion. *The Automotive Parts Manufacturers’ Association in Canada has expressed concerns that the duties would cause supply chain disruption and higher prices. US Customs and Border Protection Guidance
US Customs and Border Protection has released guidance stating that CUSMA-compliant auto parts will not be subject to the 25% tariff.
| Exemption Details | Non-Exempt Parts |
|---|---|
| Exemption applies to American-made parts of cars that comply with CUSMA | Automobile knock-down kits and parts compilations |
White House Executive Orders
The White House has signed executive orders to help the auto industry weather the tariff storm. *Automakers that finish vehicles in the US will be eligible for a rebate on imported auto parts equal to 15% of the vehicle’s retail price. *The rebate will drop to 10% the following year. Industry Expert Insights
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association in Canada, has welcomed the announcement. “The industry has been warning, I’ve been warning, for three months that tariffs on auto parts would shut down manufacturing,” he said. “The Trump administration was facing a’stark line in the sand’ with the incoming duties on auto parts. To bet against the industry that it would shut itself down would be one heck of a political risk to take.”
Canadian Industry Implications
The announcement has implications for the Canadian auto industry, which has been developing since the early 1900s. *Stellantis has confirmed that it will close its auto assembly plant in Windsor, Ont. for a week starting May 5. *The company attributed the closure to preparations for the upcoming launch of the 2026 model year Chrysler Pacifica, Chrysler Grand Caravan, Chrysler Voyager, and Dodge Charger Daytona. Conclusion
The exemption for CUSMA-compliant auto parts is a welcome relief for the North American automobile industry, which has been under intense pressure due to the imposition of tariffs. The White House executive orders will help the industry weather the tariff storm, and the Canadian industry is breathing a sigh of relief.
“You can spin anything you want in this era of long lag times of macro economic effect, but you can’t spin people being at home,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association in Canada.
The Canadian Press has been following this story closely, and our report was first published on May 1, 2025. Kelly Geraldine Malone is the author of this article.