U.S. President Donald Trump has announced a new 25% tariff on imported medium- and heavy-duty trucks starting on Nov. 1 of this year.
However, the new tariff is not likely to have a big impact on Canada as the tariff includes a carveout for vehicles traded under the existing Canada-U.S.-Mexico Agreement on trade.
Trucks compliant with the trade agreement, better known as CUSMA, will be tariffed only on their non-American parts.
The new U.S. duties will not hit automotive parts that are compliant under the North American trade pact. However, a new 10% tariff will be placed on buses and motorcoaches.
The Trump administration also included a tariff discount for companies that produce and sell completed automobiles in America.
Still, the latest tariff will impact semi-trailers and large pick-up trucks, many of which are bestsellers, mirroring the duties placed on smaller vehicles earlier this year.
Trump continues to implement sector-specific tariffs that include steel, aluminum, copper and lumber.
However, the latest tariffs could provide some relief from 50% steel and aluminum tariffs on Canada and Mexico.
A White House official has said that the U.S. may reduce duties on steel and aluminum to 25% for companies that are investing in those industries within America.
It is not clear whether or when a reduced tariff rate for steel and aluminum would be implemented for Canada and Mexico.
The American Trucking Association, a lobby group, has voiced its opposition to the tariffs, saying it could drive up prices in an industry that is already reeling from steel and aluminum tariffs.
Lobbyists and advocates say that the North American automobile industry is integrated and many of the trucks were already being made in the U.S. with parts from other countries.
