US Lowers Auto Tariff on Mexican Cars to 15% from 25%

The US government has officially reduced the average tariff on passenger vehicles imported from Mexico from 25% to approximately 15%, contingent on compliance with USMCA rules of origin. The change, detailed in Proclamation 10908, was published by the US Department of Commerce in the Federal Register and retroactively effective from Apr. 3, 2025.

“Once the new regulation takes effect, vehicles manufactured in Mexico and exported to the United States will face around a 15% tariff instead of the 25% previously applied,” said Marcelo Ebrard, Mexico’s Minister of Economy. He added that in some cases, the reduction could be even greater, depending on specific USMCA criteria.

This policy shift stems from a prior decision under President Donald Trump to impose a 25% tariff on certain vehicle and auto part imports. While that tariff remains in place, the new measure provides a conditional reduction for imports from Mexico and Canada, making them the only countries eligible for the discounted rate. The United Kingdom, by contrast, can export up to 100,000 vehicles annually to the United States at a 10% tariff.

“If a vehicle includes 40% US content, the importer avoids paying the tariff on that portion, with the remaining value still subject to the tariff. This significantly reduces the impact for Mexico, reinforcing its status as a key trading partner,” Ebrard explained.

The measure also introduces retroactive reimbursement. Mexican exporters who previously paid the higher 25% tariff on qualifying vehicles may be eligible for refunds.

In 2024, the United States imported approximately 8.1 million cars globally, valued at an estimated US$248.8 billion, according to categories outlined in the annex of the proclamation. Mexico’s auto industry is poised to benefit substantially, given its strong integration into North American supply chains and its ability to meet USMCA requirements.

However, challenges remain. “While the tariff is nominally 25%, it applies only to the non-US value and factors in a 40% US content requirement, reducing the effective rate to around 15%. Nonetheless, this introduces significant operational complexity for companies,” said Adrián González, President, Global Alliance Solutions.

González noted that not all automakers can meet the content requirement. “US manufacturers like Ford and General Motors are likely to comply, but many Japanese or German automakers may not. For them, the tariff will remain closer to 25%,” he said.