Effective November 1, 2025, tariffs will be applied to U.S. entries of certain medium- and heavy-duty vehicles, parts, and buses, pursuant to Section 232 of the Trade Expansion Act of 1962. Proclamation 10984 does far more than introduce tariffs on medium- and heavy-duty vehicles (MHDVs) and parts thereof (MHDVPs). In addition, (1) the Section 232 automobile part tariff rebate provision has been extended, (2) a unique “opt-in” provision has been introduced for Section 232 automobile part and MHDV part tariffs, and (3) several revisions have been made to the tariff ‘stacking’ provisions applicable to certain regimes enacted pursuant to Section 232 as well as the International Emergency Economic Powers Act. Interested parties may take advantage of several liberalizing adjustments, described below.
The Scope and Level of Section 232 Medium- and Heavy-Duty Vehicle and Part Tariffs
Proclamation 10984 begins by addressing the results of the Section 232 investigation into imports of MHDVs and MHDVPs, initiated on April 22, 2025. Although Commerce’s full report has not been publicly released, it was completed well in advance of the 270-day statutory deadline. Proclamation 10984 states that Commerce found such products essential to U.S. national security, due to their military, emergency response, and freight moving applications. Commerce further found large and growing levels of MHDV and bus import penetration (43% for Class 4 through 8 MHDVs), significant overlap in “components, materials, and manufacturing capacity” between MHDVs and buses, and insufficiently diversified, import-dependent MHDVP supply chains. These, Commerce concluded, pose a threat to U.S. national security and warrant action pursuant to Section 232.
In response, the President has acted to impose certain tariffs, aiming for “a long-term stabilization of United States-produced MHDVs’ market share at approximately 80 percent.” The tariffs come in three categories: MHDVs, MHDVPs, and Buses. The definition of these terms for purposes of this Section 232 tariff regime, tariff rate, and exclusions are summarized below. These tariffs go into effect for entries made on or after November 1, 2025.
MHDV Tariffs
“MHDVs” comprise products classifiable in 25 subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) that appear under Headings 8701, 8704, 8705, 8706, and 8709. The full list can be found on page 48,460 of the Federal Register notice. The applicable Section 232 tariff rate is 25%, in addition to other applicable tariffs.
Several exceptions are provided. First, imported articles classifiable under the MHDV HTSUS subheadings are excluded from tariff coverage if they “are not medium- and heavy-duty vehicles.” Although the language of Proclamation 10984 indicates that Section 232 tariffs apply broadly to “imported products” classifiable under the MHDV HTSUS subheadings, whereas the exclusion applies to products “that are not medium- and heavy-duty vehicles,” the associated CSMS message clarifies that the tariffs apply to “imports of MHDVs” classifiable under the MHDV HTSUS subheadings, whereas the exclusion applies to products classifiable under the MHDV HTSUS subheadings that are “not MHDVs.” If importers are uncertain whether their vehicles are MHDVs, they should consider engaging with Commerce and/or U.S. Customs and Border Protection (CBP) to obtain clarification.
Second, imported MHDVs that are “eligible for special tariff treatment under the United States-Mexico-Canada Agreement (USMCA)” may be eligible to pay Section 232 duties only on the non-U.S. content of such MHDVs. “U.S. content” is defined as “the value of the medium-or heavy-duty vehicle attributable to U.S.-based activity supporting domestic production.” However, this provision is not automatic in its operation. Eligibility is predicated the submission of documentation to and subsequent “approval from the Secretary of Commerce.” CBP instructs importers to “{c}ontact the U.S. Department of Commerce for details on the process to receive approval from the Secretary of Commerce” and further provides that importers to “not report any duties based on {U.S. or} non-U.S. content under th{e associated} HTSUS classification until further guidance is provided.” As such, this exception, though meaningful, remains temporarily inactive in practice, pending further administrative guidance.
Third, imported MHDVs manufactured in a year at least 25 years prior to the year of the date of entry are excluded from these Section 232 tariffs.
Bus Tariffs
“Buses” comprise products classifiable in ten HTSUS subheadings appearing under Heading 8702. The full list can be found on page 48,460 of the Federal Register notice. The applicable Section 232 tariff rate is 10%, in addition to other applicable tariffs.
Unlike MHDVs, imported articles classifiable under the HTSUS subheadings for Buses are not excluded from Section 232 tariffs by virtue of not being Buses. Nor is there an exclusion from Section 232 tariffs for the U.S. content of imported Buses that qualify for preferential tariff treatment under the USMCA. Buses may, however, qualify for the exclusion for imported Buses manufactured in a year at least 25 years prior to the year of the date of entry. The relatively more rigid treatment for Buses is likely due to the lower (10% vs. 25%) baseline tariff rate applied.
MHDVP Tariffs
“MHDVPs” comprise “parts of medium- and heavy-duty vehicles classifiable in” 182 specified HTSUS subheadings falling within Headings 40,70, 73, 83, 85, 87, 90, and 94. The full list can be found on page 48,462-63 of the Federal Register notice. Other articles classifiable in these HTSUS subheadings are not subject to the additional Section 232 tariffs. The applicable Section 232 tariff rate is 25%, in addition to other applicable tariffs.
For now, two exemptions are provided. MHDVPs that “qualify for preferential tariff treatment under the” USMCA, other than “knock-down kits or parts compilations” are exempt from these Section 232 tariffs. This exemption is intended to be temporary. Per Proclamation 10984, Commerce should publish notice in the Federal Register once Commerce has established a process for limiting the USMCA exemption only to the U.S. content of USMCA-qualifying MHDVPs. Separately, products classifiable under the MHDVP HTSUS Subheadings “that are not parts of medium- and heavy-duty vehicles” are also exempt from these Section 232 tariffs.
Expansion of MHDVP Coverage Anticipated
Proclamation 10984 instructs Commerce to “establish a process for including additional MHDVPs within the scope of the tariffs.” These inclusions are to be based on Commerce’s monitoring of MHDV, Bus, and MHDVP imports, although Commerce “may include provisions for the receipt of information and requests for additions of specified MHDVPs from domestic producers of MHDVPs or other interested entities or individuals.” If any such procedures for public participation are established, they will likely be published in the Federal Register.
No Country-Specific Carve-Outs for MHDV, Bus, or MHDVP Tariffs
In contrast to the Section 232 tariff regime on automobiles and automobile parts, which incorporate various modifications for products of the United Kingdom, Japan, and the European Union, the tariffs on MHDVs, Buses, and MHDVPs contain no such exclusions at this time. Modifications may (or may not) be negotiated and implemented in the future.
Section 232 MHDVP Rebate Mechanism & Modifications to Section 232 Auto Part Rebate Mechanism
In addition to the exemptions, Proclamation 10984 provides for the establishment of a rebate mechanism that is similar to the mechanism established for Section 232 automobile part tariffs by Proclamation 10925, but expanded.
Specifically, MHDV manufacturers will be eligible to receive an import adjustment offset equal to “3.75 percent of the aggregate value of all MHDVs assembled in the United States by that manufacturer, as determined annually by the Secretary, from November 1, 2025, through October 31, 2030.” “MHDVs assembled” encompasses “MHDVs that undergo final assembly in the United States.” In addition, an equivalent offset regime is to be established for MHDV engine manufacturers, with the offset amount equal to 3.75 percent of the “aggregate value of MHDV engines assembled by that manufacturer in the United States.”
The Section 232 MHDVP tariff rebate system is thus distinct from the original Section 232 automobile part tariff rebate system in three significant respects: its period of availability, the existence of the separate system for engine manufacturers, and its applicability to knock-down kits or other equivalent parts compilations. To make the two systems consistent, Proclamation 10984 therefore modifies the Section 232 automobile part tariff rebate systems as follows: (1) its period of availability is expanded to cover the MSRP value of all automobiles assembled in the United States by the manufacturer from April 5, 2025, through April 30, 2030; (2) the step down from 3.75% to 2.5% of the value is eliminated; (3) Section 232 automobile part tariff rebate system will be established for automobile engine manufacturers based on the aggregate value of automobile engines assembled in the United States by the engine manufacturer; and (4) it is specified that the offsets are not available for Section 232 tariffs on knock-down kits or other equivalent parts compilations.
As concerns administration of the Section 232 MHDVP tariff rebate system, the MHDV manufacturer may authorize other importers of record to use the manufacturer’s offset amount, and the offset may only be used against Section 232 MHDVP tariff liability. However, the offset may not reduce Section 232 MHDVP tariff liability for knock-down kits or other equivalent parts compilations. Precise procedures have not yet been established, but in general Commerce will administer the determination of the offset amount; manufacturers will transmit any importer of record authorizations to Commerce, which will provide an offset license number; and Commerce will in turn communicate these to CBP for administration of the offsets.
Finally, the continuity of the tariff offset system established with respect to both MHDVPs and automobile parts is not guaranteed. An exception set forth in Proclamation 10984 provides that Commerce may publish a Federal Register notice that “prospectively prohibits” manufacturers from using their offset amount if the offset program is found not to be fulfilling the purposes the respective Section 232 tariff regimes.
Revised Stacking Hierarchy; New “Opt-In” Provision
Proclamation 10984 updates the tariff stacking hierarchy as it relates to Section 232 automobile tariffs and aligns the stacking treatment of automobile tariffs and MHVPs. MHDVs or automobiles subject to their respective Section 232 tariff regimes (including automobiles of the UK, EU, or Japan) will not be subject to the Section 232 aluminum, copper, or steel tariff regimes, or the IEEPA Fentanyl tariffs on Canada or Mexico. These exclusions apply even if the article in question benefits from the USMCA-based exemption from Section 232 MHDV or automobile tariffs. The associated CSMS message confirms that this de-stacking applies to Buses as well. IEEPA reciprocal tariffs, IEEPA Brazil tariffs, and IEEPA India tariffs also will not apply to MHDVs, Buses, or automobiles subject to Section 232 tariffs, but if otherwise applicable these tariff regimes may apply to a vehicle (or portion thereof) that avoids paying Section 232 duties by qualifying for preferential tariff treatment under USMCA.
As for MHDVPs and automotive parts, such products subject to their respective Section 232 tariff regimes (including automotive parts of the UK, EU, or Japan) will not be subject to the Section 232 aluminum, copper, steel, or wood tariff regimes, or the IEEPA Fentanyl tariffs on Canada or Mexico. Although the exclusion from Section 232 wood products tariffs is limited to automobile parts, there does not appear to be any overlap between the HTSUS subheadings presently subject to Section 232 wood products tariffs and “automobiles” or “MHDVs” as defined under those Section 232 regimes. These exclusions apply even if the article in question benefits from the USMCA-based exemption from Section 232 MHDVP or automobile part tariffs. IEEPA reciprocal tariffs, IEEPA Brazil tariffs, and IEEPA India tariffs also will generally not apply, unless the part in question benefits from the USMCA-based exemption from the Section 232 MHDVP or automobile parts tariffs. However, an automobile part for which the corresponding Section 232 tariff rebate mechanism is used to reduce Section 232 automobile part duties remains “subject to” the Section 232 automobile part tariffs, such that it would not subject to the other Section 232 and IEEPA tariff regimes described earlier in this paragraph. (The same may be true for MHDVPs using an MHDVP tariff rebate, but CBP has not yet issued a CSMS expressly stating as much).
The stacking provisions impart certain benefits to entering under the Section 232 regimes applicable to automobiles, MHDVs, and their parts. For example, Section 232 tariffs applicable to MHDVs (25%) are currently less than Section 232 tariffs applicable to imports of copper products (50%). Proclamation 10984 introduces a new mechanism by which importers of articles heretofore falling outside of these Section 232 tariff regimes may “opt in,” provided certain conditions are satisfied.
First, for other articles used as MHDV parts, importers can elect to enter under the MHDV Section 232 tariff regime by certifying that the part “will be used for medium- or heavy-duty vehicle production or repair activity in the United States.” Similarly, for other articles used as automobile parts importers can elect to enter under the automobile Section 232 tariff regime by certifying that the part “will be used for automobile production or repair activity in the United States.”
Parts entered under one of these provisions (other than knock-down kits or parts compilations) can still claim the relevant Section 232 duty exemption if they qualify for preferential tariff treatment under the USMCA. However, neither of these options are not available for articles classifiable under one of the following HTSUS subheadings: (A) those listed under Chapter 99, Subchapter III, Note 33(g); (B) those listed under Chapter 99, Subchapter III, Note 38(i); or (C) those appearing in Chapters 72, 73, or 76.
New Drawback Liberalization for Autos, also Available for MHDVs
As originally promulgated, duty drawback was not available with respect to Section 232 tariffs on automobiles and automobile parts. Proclamation 10984 changes this for automobile parts. For drawback requests filed on or after November 1, 2025, direct identification manufacturing drawback (19 U.S.C. § 1313(a)) and substitution manufacturing drawback (19 U.S.C. § 1313(b)) may be claimed with respect to the duties imposed on MHDVPs and automobile parts.
New Mechanism for Potentially Reducing Section 232 Tariffs on Steel and Aluminum
Finally, Proclamation 10984 provides for the possibility of certain targeted adjustments to the tariffs imposed pursuant to Section 232 on steel products, aluminum products, and their respective derivative articles. Currently, the Section 232 tariff rate applicable under those regimes are generally 50%, although some lower rates arising out of ongoing trade negotiations have been implemented (e.g., 25% for products of the United Kingdom) or appear to be under consideration (e.g., for products of the European Union).
However, for USMCA-qualifying steel that was melted and poured in Canada or Mexico and used to supply U.S. automobile or MHDV manufacturers; and for USMCA-qualifying aluminum that was smelted and cast in Canada or Mexico and used to supply U.S. automobile or MHDV manufacturers, Commerce is authorized to reduce Section 232 steel and/or aluminum tariff rates. The reduced rates can be no lower than 25% and no less than half of the generally applicable Section 232 tariff rate. Quantities benefiting from any such reduced rates must be “equal to newly committed United States production capacity.”
Preparing Supply Chains
Cassidy Levy Kent’s attorneys, economists, compliance experts, and licensed customs brokers are ready to help companies develop strategic responses to the latest changes in U.S. tariff policy and plan for potential developments. Cassidy Levy Kent has extensive experience counseling clients to plan compliant supply chains that manage tariff risks, and we routinely assist with preparing and filing comments for consideration in Section 232 investigations. Our team’s deep familiarity with trade law and policy enables clients to adapt and stay ahead of the curve.