Trump imposes 25 per cent tariffs on heavy trucks: the impact on the trade war

Under the trade agreements reached with Japan and the European Union, the US has accepted 15% tariffs on light vehicles, but it is unclear whether they will also be applied to larger vehicles. The Trump administration has also allowed manufacturers to deduct the value of US components from the tariffs paid on light vehicles assembled in Canada and Mexico.

Larger vehicles include everything from delivery trucks, rubbish trucks, utility trucks, public transport, shuttle buses, school buses, tractor-trailers, semi-trailers, and heavy-duty professional vehicles.

The US Chamber of Commerce had previously urged the Commerce Department not to impose new tariffs on trucks, noting thatthe top five importing countries are Mexico, Canada, Japan, Germany, and Finland, "all of which are allies or close partners of the United States and pose no threat to US national security".

Mexico is the largest exporter of medium- and heavy-duty trucks to the U.S. A study released in January found that imports of these large vehicles from Mexico have tripled since 2019, now reaching about 340,000 units, according to government statistics.

According to the North American Free Trade Agreement Usmca, medium and heavy trucks are exempt from tariffs if at least 64 per cent of the value of a heavy truck comes from North America, through components such as engines and axles, raw materials such as steel, or labour for assembly.

The tariffs could also affect Stellantis, the parent company of Chrysler, which manufactures heavy Ram trucks and commercial vans in Mexico. Stellantis had lobbied the White House not to impose high tariffs on its trucks produced in Mexico.

Swedish Volvo Group is building a $700 million heavy-duty truck factory in Monterrey, Mexico, which is scheduled to go into operation in 2026. According to the US International Trade Administration, Mexico is home to 14 manufacturers and assemblers of buses, trucks and road tractors, and two engine manufacturers.

Mexico attempted to oppose the new tariffs, declaring to the Department of Commerce in May that all Mexican trucks exported to the US contain an average of 50 per cent US components, including diesel engines.

Last year, the US imported almost USD 128 billion worth of heavy vehicle components from Mexico, accounting for about 28% of total US imports.

Tariffs threaten an industry that is already being impacted by tariffs on steel and aluminium as well as stricter environmental regulations. New import taxes could increase the prices of vehicles used in several sectors, including shipping, construction and municipal services.

But supporters of the measure say it will help strengthen domestic production. "Trump's planned tariffs on imported heavy trucks are a big win for American workers and large US manufacturers," said Nick Iacovella of the Coalition for a Prosperous America, a protectionist group. "This action will strengthen this vital industry and protect it from unfair foreign competition."