Vehicle Import Duties and Section 232 Auto Tariffs: USMCA and KORUS

Importing a car into the United States now costs more than it did a year ago, and the math has two layers. Vehicle import duties and Section 232 auto tariffs work together: a 25% Section 232 tariff sits on top of the baseline Harmonized Tariff Schedule rate for the vehicle’s classification, so a passenger car from a country without a preferential arrangement carries a combined 27.5% duty, and a light truck carries 50%. The Section 232 charge took effect for automobiles on April 3, 2025 under Proclamation 10908, and for covered auto parts no later than May 3, 2025.¹ Federal processing fees, a possible gas guzzler tax, state sales or use tax at registration, and separate safety and emissions compliance all sit outside the tariff calculation.

What the 25% Section 232 Tariff Adds

The proclamation’s language is direct: the 25% is “in addition to any other duties, fees, exactions, and charges applicable to such imported automobiles.” It stacks. A sedan already carrying the 2.5% Most-Favored-Nation duty now pays 27.5%. A light truck already carrying the 25% baseline pays 50%. The covered categories include sedans, SUVs, crossover utility vehicles, minivans, and cargo vans, along with engines, engine parts, transmissions, powertrain components, and electrical parts on the auto parts side.¹

The tariff does not spare used vehicles or personal imports. Buy a car overseas and ship it home, and you owe the same 25% a commercial importer owes. Two carve-outs exist. Vehicles manufactured at least 25 years before the date of entry are exempt, and U.S. government employees and military service members returning from foreign assignments are exempt from Section 232 duties on their personal vehicles.²

The legal basis is Section 232 of the Trade Expansion Act of 1962, codified at 19 U.S.C. §1862, which lets the President act on Commerce Department findings that particular imports threaten national security. The measures stay in place until the President determines the threat has passed.³

Country-Specific Rates

Not every country of origin carries the full 25%. The arrangements in effect as of late 2025:

United Kingdom: 7.5% on the first 100,000 automobiles per year.
European Union: the higher of the existing duty rate or 15%, with the baseline duty eligible for drawback.
Japan: the higher of the existing duty rate or 15%, with drawback eligibility.
South Korea: the higher of the KORUS Agreement rate or 15%, with the KORUS rate eligible for drawback.
Canada and Mexico: USMCA-originating vehicles are exempt; if a vehicle only partially qualifies, Section 232 still applies to the value of any non-U.S. content.

Trade policy in this area moves. Confirm the current rate for a specific country of origin before shipping.⁴

The Baseline Duty Underneath

Every imported vehicle is still classified under the Harmonized Tariff Schedule, and each classification has its own duty. Passenger automobiles, including sedans, station wagons, and racing cars, carry a Most-Favored-Nation duty of 2.5%. Light trucks and vehicles designed for transporting goods carry 25%, a rate commonly called the “Chicken Tax” after a 1960s trade dispute over poultry.⁵

The line between the two categories is narrower than it looks. Interior modifications as small as removing a rear seat can move a vehicle from the 2.5% column into the 25% column. Classification mistakes surface at the border, and the correction is expensive because it compounds through the Section 232 layer as well.

How Trade Agreements Cut the Duty

USMCA

A qualifying vehicle enters duty-free under the United States-Mexico-Canada Agreement, bypassing both the baseline rate and the Section 232 tariff.⁶ Qualifying is the hard part. The vehicle must reach a Regional Value Content of at least 75%, and roughly 40% to 45% of its value must come from workers earning at least $16 per hour under the Labor Value Content rule. A certificate of origin has to document both. Customs can audit these claims years later, so the underlying manufacturing records need to survive that long.

A vehicle assembled in Canada or Mexico that falls short of USMCA origin rules does not get full duty-free treatment. Section 232 applies to the non-U.S. content value.

KORUS

South Korean vehicles may qualify for reduced duties under the KORUS agreement, which uses a net cost method to calculate regional value content for automotive goods, with thresholds set in the product-specific rules. Under the current country arrangement, qualifying Korean vehicles pay the higher of the KORUS duty rate or 15%.⁴

How Customs Values the Vehicle

The rate is only half the calculation. Customs applies the percentages to the “transaction value,” meaning the price actually paid or payable when the vehicle was sold for export to the United States. That base gets adjusted upward by packing costs, any selling commissions the buyer paid, the value of assists provided to the manufacturer, and any royalties or license fees tied to the sale.⁷

International freight and marine insurance are excluded. Buy a car for $40,000 and pay $2,000 to ship and insure it, and duty is calculated on $40,000. Invoices that separate the vehicle price from the transport costs keep this clean at the port.⁷

When a vehicle arrives as a gift, an inheritance, or another personal transfer with no arm’s-length sale, there is no transaction value to use. Federal regulations require Customs to work through a hierarchy of alternative valuation methods in order: identical merchandise, similar merchandise, deductive value from U.S. resale prices, computed value from production costs, and finally a fallback. An importer can request that computed value come before deductive value, but only when filing the entry summary. Customs cannot value the car on the domestic price of a U.S.-made equivalent, on its home-market price, or on any arbitrary or minimum figure.⁸

Federal Fees on Top of Duty

Duties are not the whole bill. Every formal entry triggers a Merchandise Processing Fee at 0.3464% of the vehicle’s value for fiscal year 2026, with a minimum of $33.58 and a maximum of $651.50. On a $40,000 car the fee is about $139; on a $200,000 car it caps at $651.50.⁹

Vehicles arriving by sea also owe a Harbor Maintenance Fee of 0.125% of value, so $50 on that same $40,000 car. Land and air entries are not charged.¹⁰

Passenger cars rated below 22.5 miles per gallon combined face the federal Gas Guzzler Tax, which starts at $1,000 for cars rated between 21.5 and 22.5 mpg and rises to $7,700 for cars below 12.5 mpg. It applies only to new passenger cars, not SUVs, trucks, or used vehicles, and the schedule has not changed since 1991.¹¹

State sales or use tax is separate and comes due when you register the vehicle. Rates run from zero in states without sales tax to more than 8% in the highest jurisdictions, with local surcharges layered on top.

Safety and Emissions Compliance

Paying the tariff does not put the car on the road. Every imported vehicle has to independently satisfy federal safety standards and emissions rules, and the paperwork is separate from the customs entry.

DOT and FMVSS

Federal law bars importing a motor vehicle that does not comply with all applicable Federal Motor Vehicle Safety Standards.¹² The importer files NHTSA Form HS-7 with Customs stating the basis for admission: full conformance, a specific exemption, or a limited purpose like research or show and display.¹³ Vehicles at least 25 years old from the date of manufacture are exempt from FMVSS compliance, which is why the classic import market clusters around that threshold.¹⁴

EPA

Separately, EPA Form 3520-1 has to accompany every imported motor vehicle, including motorcycles, disassembled vehicles, and kit cars. The only exception is a new vehicle imported by the original manufacturer that already carries an EPA certificate of conformity and an EPA emission control label.¹⁵ The EPA age exemption is shorter than the DOT one: vehicles at least 21 years old in their original, unmodified condition are exempt. A replacement engine kills the exemption unless the replacement is EPA-certified and equivalent to or newer than the original.¹⁴

Bringing Back a Vehicle You Already Owned

Residents returning with a vehicle they previously owned and used in the U.S. can bring it back duty-free as long as they can identify it as the same car. A state registration card usually suffices, and Customs also accepts a CBP Form 4455 registration certificate issued before departure.¹⁶

Repairs and modifications done abroad are a different matter. Work beyond routine maintenance is dutiable at the rate that would apply if the vehicle itself were being imported. An engine rebuild or a body restoration overseas gets taxed on the value of that work.¹⁶

What Happens If You Get It Wrong

Where a vehicle is subject to a restriction related to health, safety, or conservation and does not comply, Customs may seize and forfeit it. The same applies to vehicles imported without a required license or permit, and to any vehicle with an altered or removed identification number.¹⁷

Forfeiture means losing the vehicle, not just paying a fine. The Secretary of Homeland Security has discretion to remit forfeiture or allow export instead, but neither is guaranteed. Misclassification and valuation errors that do not raise safety or admissibility issues produce financial penalties rather than forfeiture, but they can still be steep, and an inaccurate HS-7 filing or a shaky certificate of origin can hold a vehicle at the port for months.

1
Federal Register. Adjusting Imports of Automobiles and Automobile Parts Into the United States
2
U.S. Customs and Border Protection. Section 232 Additional FAQs – Automobiles and Auto Parts
3
Office of the Law Revision Counsel. 19 USC 1862 – Safeguarding National Security
4
U.S. Customs and Border Protection. New Tariff Requirements for 2025
5
United States International Trade Commission. Harmonized Tariff Schedule of the United States – Chapter 87
6
U.S. Customs and Border Protection. USMCA – Are There Tariff Duties on Goods Imported From Canada and Mexico
7
eCFR. 19 CFR 152.103 – Transaction Value
8
eCFR. 19 CFR Part 152 Subpart E – Valuation of Merchandise
9
Federal Register. Customs User Fees To Be Adjusted for Inflation in Fiscal Year 2026
10
eCFR. 19 CFR 24.24 – Harbor Maintenance Fee
11
Office of the Law Revision Counsel. 26 USC 4064 – Gas Guzzler Tax
12
Office of the Law Revision Counsel. 49 USC 30112 – Prohibitions on Manufacturing, Selling, and Importing Noncomplying Motor Vehicles and Equipment
13
National Highway Traffic Safety Administration. HS-7 Declaration Form
14
U.S. Customs and Border Protection. Importing Classic or Antique Vehicles / Cars for Personal Use
15
United States Environmental Protection Agency. Importation of Motor Vehicles and Motor Vehicle Engines Subject to Federal Air Pollution Regulations (EPA Form 3520-1)
16
eCFR. 19 CFR Part 148 Subpart D – Exemptions for Returning Residents
17
Office of the Law Revision Counsel. 19 USC 1595a – Forfeitures and Penalties