What are Tariffs and How Do they Affect 25 Year Old Cars?

There has been a lot of information, changes, and confusion about what tariffs are, and how they currently affect 25 year old cars. There are two Executive Orders that were put out by President Trump about Automobiles, and Reciprocal Tariff.   A tariff is a duty imposed by a national government, customs territory, or supranational union on imports of goods. Besides being a source of revenue, import duties can also be a form of regulation of foreign trade and policy that burden foreign products to encourage or safeguard domestic industry.

The First Executive order written is called Adjusting Imports of Automobiles and Automobile Parts into the United States, from March 26th 2025.  https://www.whitehouse.gov/presidential-actions/2025/03/adjusting-imports-of-automobiles-and-autombile-parts-into-the-united-states/  

The Federal Register notice is here: https://public-inspection.federalregister.gov/2025-05930.pdf

This executive order said that Automobile and light truck imports get a +25% tariff increase starting April 3rd,2025. That means cars get a 2.5% + 25%= 27.5% tariff on the Ad valorem (value), and light trucks get a 25% + 25% = 50% tariff on the Ad Valorem(value)

Ad valorem is a Latin phrase that translates to “according to the value.” The essential characteristic of ad valorem tax is that it is proportional to the value of the underlying asset , unlike a specific tax , where the tax amount remains constant, irrespective of the underlying asset's value.

On the chart above, and in the text of the Executive order/Federal Register notice is this section, which says that 25 year old vehicles get a 0% additional ad valorem tariff.

9903.94.04:  Applies to all entries of passenger vehicles and light trucks from all countries classifiable in the headings or subheadings listed above that were manufactured in a year at least 25 years prior to the year of the date of entry.

0% additional ad valorem rate of duty

So our conclusion based on what is in the Executive order/Federal Register notice is that 25 year old cars are subject to a 2.5%+0%= 2.5% ad valorem tariff.  But this isn't the final conclusion. 

 

The next Executive Order was released on April 2, 2025, called Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.  https://www.whitehouse.gov/presidential-actions/2025/04/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and-persistent-annual-united-states-goods-trade-deficits/

That document said in Sec 2 Reciprocal Tariff Policy, that there would be an additional 10 percent base duty for all trading partners, and other increases as set forth in Annex 1 of the Executive Order.

Sec. 2.  Reciprocal Tariff Policy.  It is the policy of the United States to rebalance global trade flows by imposing an additional ad valorem duty on all imports from all trading partners except as otherwise provided herein.  The additional ad valorem duty on all imports from all trading partners shall start at 10 percent and shortly thereafter, the additional ad valorem duty shall increase for trading partners enumerated in Annex I to this order at the rates set forth in Annex I to this order.  These additional ad valorem duties shall apply until such time as I determine that the underlying conditions described above are satisfied, resolved, or mitigated.   

Like any rule or regulation, there are often exceptions or exemptions.  Here for the reciprocal tariff that starts at 10% and goes up from there here are the exceptions.

Sec. 3.  Implementation.  (a)  Except as otherwise provided in this order, all articles imported into the customs territory of the United States shall be, consistent with law, subject to an additional ad valorem rate of duty of 10 percent. 

Under that section (b) sets forth the items not subject to the ad valorem rates of duty of that Executive Order.

(b)  The following goods as set forth in Annex II to this order, consistent with law, shall not be subject to the ad valorem rates of duty under this order: (iii) all automobiles and automotive parts subject to the additional duties imposed pursuant to section 232 of the Trade Expansion Act of 1962, as amended, and proclaimed in Proclamation 10908 of March 26, 2025 (Adjusting Imports of Automobiles and Automobile Parts Into the United States);

Automobiles and auto parts are not subject to the additional reciprocal tarrif as stated in this Executive order. 

 

So our conclusion is currently that 25 year old vehicles pay a 2.5% +0% tariff.  As of yesterday it was stated by the president that there would be a 90 day pause on the reciprocal tariff. Automobiles and auto parts should not be subject to the reciprocal tariff based on the information in the two Executive Orders and Federal Register notices.  All this information is subject to change. 

We have been paying 2.5% tariff on cars since we started importing. It is part of our costs of goods.  The prices of our cars that have already been imported to the US reflect this 2.5% tariff. If the costs of the tariff go up, then the prices of vehicles that have not been imported, but are imported after the implementation of a higher tariff will increase proportionally to the tariff.