Executive summary

On 29 April 2025, the White House issued an Executive Order affecting tariffs on imported articles and amendments to a prior Executive Order addressing specific tariffs on automobiles and automobile parts.

The new measures aim to prevent the cumulative effect of overlapping tariffs and to adjust tariffs on automobiles and automobile parts.

Addressing Certain Tariffs on Imported Articles

President Trump's Executive Order, titled "Addressing Certain Tariffs on Imported Articles," responds to the increasing complexity of the tariff landscape, particularly as multiple tariffs have been imposed under various statutory authorities and Executive Orders. Accordingly, this Executive Order aims to prevent the cumulative effect of overlapping tariffs on the same article. Notably, the Executive Order applies to all entries made on or after 4 March 2025.

Non-stacking of certain tariff measures

The Executive Order establishes a clear procedure for determining which tariffs apply to an article subject to overlapping tariffs. Specifically:

• Tariffs on automobiles and automobile parts: Articles subject to tariffs under Proclamation 10908 (Adjusting Imports of Automobiles and Automobile Parts Into the United States) are not subject to additional tariffs imposed by:
  • Executive Order 14193 (Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border)
  • Executive Order 14194 (Imposing Duties to Address the Situation at Our Southern Border)
  • Proclamation 9704 (Adjusting Imports of Aluminum)
  • Proclamation 9705 (Adjusting Imports of Steel)
• Tariffs on Canada and Mexico: Articles subject to tariffs under Executive Orders 14193 or 14194 will not incur additional tariffs from Proclamations 9704 or 9705.
• Tariffs on aluminum and steel: Articles subject to tariffs under Proclamation 9704 or Proclamation 9705 may incur additional tariffs from each other, provided that the article satisfies all conditions necessary for the application of those tariffs.

Amendments to Adjusting Imports of Automobiles and Automobile Parts

Amendments to Proclamation 10908, also issued on 29 April, retroactively adjust import duties on automobiles and automobile parts coming into the US. The duties on automobile parts will decrease from the previous rate of 25% to a tiered structure that will set the duty at 15% for parts accounting for 15% of the vehicle's Manufacturer's Suggested Retail Price (MSRP) for the first year and a 10% duty for parts accounting for 10% of the vehicle's MSRP in the second year. (For background, see EY Global Tax Alert, US President Trump announces 25% additional tariff on imported automobiles and automobile parts, dated 27 March 2025.)

This rate reduction will be implemented through the introduction of an import-adjustment offset amount for manufacturers. This offset is based on the aggregate MSRP of all automobiles the manufacturer assembles in the US. Manufacturers can apply for an offset amount equal to 3.75% of the aggregate MSRP value of all automobiles assembled in the US from 3 April 2025 through 30 April 2026. For the following year, from 1 May 2026 through 30 April 2027, the offset amount will be reduced to 2.5% of the aggregate MSRP value.

Eligibility and application process

Manufacturers seeking the import adjustment offset must submit documentation to the US Secretary of Commerce, including projections of the number of automobiles they plan to assemble in the US, a breakdown of projected tariff costs due to imported automobile parts, and a certification of the accuracy of the submitted information, signed by a senior officer of the manufacturer.

Actions for businesses to consider

In light of these developments, business may want to consider taking the following actions:

• Review historical entries to identify entries that may be eligible for refunds as a result of the measures through Post-Summary Corrections (i.e., method to electronically correct entry summaries)
• Review the implications of the measures on your import strategies and compliance obligations
• Engage with legal and trade advisors to navigate the complexities of the new tariff structures to help your business comply with updated regulations