Mumbai: A 25 per cent US tariff on medium and heavy-duty trucks and a 10 per cent duty on buses took effect on Saturday, following President Donald Trump's administration's investigation into national
security risks from these imports.
“Products subject to tariffs under this proclamation will not be subject to additional or existing sectoral tariffs on steel, aluminium, copper, automobiles and automobile parts, and lumber,” the White House said in a statement. President Trump started the investigations, under the authority of the Trade Expansion Act of 1962, to impose tariffs on various categories of goods in efforts to boost domestic manufacturing and punish countries deemed to be taking advantage of the United States.
The move is “vital for America’s military readiness, emergency response capabilities, and critical infrastructure for economic activity,” the White House statement said. Trucks will be exempted from separate "reciprocal" duties setting out rates varying by trading partners. The American Trucking Associations, representing some 37,000 companies, urged in May for the Trump administration to hold off truck tariffs, citing concerns that reduced sales would negatively impact manufacturers, dealers, and motor carriers.
Under the new tariff regime, trucks qualifying for favourable US-Mexico-Canada Agreement (USMCA) treatment will incur 25 per cent tariffs solely on their non-US content. Additionally, eligible truck parts will enter the US tariff-free until the Commerce Department establishes a process to identify non-US content. A United Overseas Bank analysis found that over 70 per cent of heavy trucks are imported from Mexico, while approximately 20 per cent come from Canada.
Trade pressure has impacted Mexico, with heavy vehicle exports to the U.S. declining nearly 26 per cent year-on-year from January to August. Mexico's economy shrank 0.3 per cent YoY in the third quarter, as the country engaged in discussions with Washington to seek relief from extensive tariffs.
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