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U.S. Confirms Tariff Exemptions for CUSMA-Compliant Canadian Auto Parts

Customs and Border Protection guidance clarifies zero percent duties on eligible parts while maintaining levies on knock-down kits and compilations.

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An employee works on the production line at the Martinrea auto parts manufacturing plant, in Woodbridge, Ont., on Monday February 3, 2025. The site supplies auto parts to both Canadian and US auto plants. THE CANADIAN PRESS/Chris Young

Overview

  • U.S. Customs and Border Protection announced that auto parts compliant with the Canada-U.S.-Mexico Agreement (CUSMA) will be exempt from the 25% import tariffs starting May 3.
  • The exemption does not extend to knock-down kits or parts compilations, which will remain subject to the full 25% tariff.
  • President Trump’s recent executive order introduced phased rebates for automakers finishing vehicles domestically and prevented additional tariffs like steel and aluminum duties from stacking onto auto tariffs.
  • The tariffs, part of broader U.S. efforts to encourage domestic manufacturing, have raised concerns about potential supply chain disruptions and higher consumer costs.
  • Canada and Mexico have imposed reciprocal tariffs, fueling trade tensions and uncertainty for North American automakers as they navigate the evolving trade policies.