Your Imported Dream Car Just Got More Expensive, And It’s Probably Going To Get Worse

Back in the spring, President Trump sent the American import community into a panic when he announced 25 percent tariffs on car imports and imported car parts. These tariffs, in combination with the government’s global reciprocal tariffs, had enthusiasts worrying that their dream imports would become 10 to 25 percent more expensive. It’s taken forever, but we now have word from an organization affiliated with U.S. Customs and Border Protection, and the outlook isn’t good. Your dream imported car is exempt from the car tariffs, but it’s not exempt from the global reciprocal tariffs. Here’s what that means and why it might get so much worse come August 1.

I first reported on this issue back in March and then in early April, and it was a rollercoaster of woe. In late March, the White House published “ADJUSTING IMPORTS OF AUTOMOBILES AND AUTOMOBILE PARTS INTO THE UNITED STATES” on its Presidential Actions page. The President’s desired car industry tariffs, as they were written, implied that all cars entering the country, regardless of their age, would be hit with this tariff. However, the wording was also vague enough that some thought that maybe cars that were at least 25 years old were exempt.

Let’s Jump Right In

Here’s the original proclamation that alarmed the car importation community, emphasis mine:

On February 17, 2019, the Secretary of Commerce (Secretary) transmitted to me a report on his investigation into the effects of imports of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks (collectively, automobiles) and certain automobile parts (engines and engine parts, transmissions and powertrain parts, and electrical components) (collectively, automobile parts) on the national security of the United States under section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862) (section 232). Based on the facts considered in that investigation, the Secretary found and advised me of his opinion that automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States.

[…]

Except as otherwise provided in this proclamation, all imports of articles specified in Annex I to this proclamation or in any subsequent annex to this proclamation, as set out in a subsequent notice in the Federal Register, shall be subject to a 25 percent tariff with respect to goods entered for consumption or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on April 3, 2025, for automobiles, and on the date specified in the Federal Register for automobile parts, but no later than May 3, 2025, and shall continue in effect, unless such actions are expressly reduced, modified, or terminated. The above ad valorem tariff is in addition to any other duties, fees, exactions, and charges applicable to such imported automobiles and certain automobile parts articles.

The White House then published a Fact Sheet, which only confused matters:

The 25% tariff will be applied to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks, as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components), with processes to expand tariffs on additional parts if necessary.

These tariffs add to existing duties. Passenger vehicles were already subject to a 2.5 percent duty and thus would be slapped with a 27.5 percent duty after the 25 percent tariff is layered on.

Things looked especially bad for imported trucks, which were already subject to the 25 percent Chicken Tax. Layer on the auto tariff, and that’s a whopping 50 percent. Truth be told, 50 percent isn’t all that much when you’re importing something like a Japanese Kei truck, which you might have paid less than $500 for in a Japanese auction. But it would make a big difference if you imported something like an Isuzu Elf, a Nissan Atlas, or another kind of bigger, more expensive truck like the one pictured above.

It did seem like enthusiasts got a reprieve when the rule was published in the Federal Register, making it official. Click here to read the boring legalese, but the important part for enthusiasts was Heading 9903.94.04, which stated:

Heading 9903.94.04 applies to all entries of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks from all countries classifiable in the headings or subheadings enumerated in subdivision (b) of this note that were manufactured in a year at least 25 years prior to the year of the date of entry.

Heading 9903.94.01 says:

Except for 9903.94.02, 9903.94.03, and 9903.94.04, effective withrespect to entries on or after April 3, 2025, passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks, as specified in note 33 to this subchapter, as provided for in subdivision (b) of U.S. note 33 to this subchapter.

But Trump threw a curveball on April 2 with the announcement of different global reciprocal tariffs. From the White House:

• Using his IEEPA authority, President Trump will impose a 10% tariff on all countries.
  • This will take effect April 5, 2025 at 12:01 a.m. EDT.
• President Trump will impose an individualized reciprocal higher tariff on the countries with which the United States has the largest trade deficits. All other countries will continue to be subject to the original 10% tariff baseline.
  • This will take effect April 9, 2025 at 12:01 a.m. EDT.

In essence, the President created a layer cake of tariffs. All imported goods were subjected to a baseline additional reciprocal tariff of 10 percent, unless the good was covered by another tariff category. This did not resolve any confusion whatsoever.

Everyone Got Confused

In reality, this created two camps within the car importing community. Several importers and import brokers concluded that, due to the text above, imported cars that were at least 25 years of age were exempt from both sets of tariffs. The logic was that, based on the text, your car shouldn’t be hit by a reciprocal tariff because it falls under a category covered by the auto tariff. However, because of the age exemption in the car tariff, you don’t get hit with the 25 percent. Thus, your duty should be 2.5 percent because you are not eligible for either tariff.

However, other importers and brokers came to a different conclusion. Their reading of the text above was that, yes, cars at least 25 years old are exempt from the auto tariff. That’s something everyone agrees on. However, the disagreement comes from the reciprocal tariff, as many importers and brokers believe that not being hit by the auto tariff means that you are then hit by the reciprocal tariff. In other words, the government is going to get extra money from you one way or another.

In May, I explained that my 1997 Honda Life had been hit by the 10 percent reciprocal tariff upon entry, leading me to pay a total duty of 12.5 percent. The problem was that nobody could give a definitive answer on whether getting hit by the reciprocal tariff was proper or not.

My Honda rode to America aboard the MOL Clover Ace roll-on roll-off ship in May, or after the tariff grace period had been expired for over a month. Here’s the wild twist: My importer contacts had hundreds of cars on the same ship and some of them even unloaded their cars at the same port on the same day. My little Honda basically kept their cars company during the long voyage.

Yet, some of these importers paid the reciprocal tariff and some did not. This was no help in solving the confusion. My Customs broker, All Ways International Shipping (AWIS), charged me a Customs duty of $32.25, or 12.5 percent of my car’s $258 purchase price. I expected to pay $6.45, or 2.5 percent. AWIS charged me the 12.5 percent based on its reading of the tariffs. It was a difference of just $25, so I didn’t really care in the end. But I still wondered: “Was that right?”

For much of May and June, the advice in the importing world was to choose a Harmonized Tariff Schedule code in your import paperwork that would correspond with you paying only 2.5 percent, not 12.5 percent. From my story:

The belief is that HTS 9903.01.33 should be the code chosen, which states:

Articles of iron or steel, derivative articles of iron or steel, articles of aluminum, derivative articles of aluminum, passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks and parts of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks, of any country, as provided in subdivision (v)(vi) through (v)(xi) of note 2 to this subchapter.

Since 25-year-old cars are exempt from the 25 percent tariff, that would mean the normal 2.5 percent. People getting hit with the 10 percent tariff are seeing HTS 9903.01.25, which says:

Articles the product of any country, except for products described in headings 9903.01.26–9903.01.33, and except as provided for in heading 9903.01.34, as provided for in subdivision (v) of U.S. note 2 to this subchapter.

So that was it, right? The problem was just that importers filling out their entry paperwork were just punching in the wrong codes? Several trusted importers in the American JDM community were saying just that.

Your Dream Car Got More Expensive

Easy ISF, a company specializing in helping importers fill and file their documents with Customs, reached out to Customs’ Automotive & Aerospace Center of Excellence and Expertise. According to U.S. Customs and Border Protection, a Center of Excellence and Expertise is run by experts in 10 selected industries as a connection point between CBP and importers:

Centers of Excellence and Expertise (Centers) are industry-focused and account-based operational organizations processing post-release trade activities on behalf of US Customs and Border Protection (CBP). Centers are aligned by 10 key industry sectors in strategic locations at Ports of Entry across the U.S. and are the strategic point of connectivity between the trade community and CBP operations. The Centers increase uniformity of practices across the Ports of Entry, facilitate the timely resolution of trade compliance issues nationwide and strengthen CBP’s ability to protect the U.S. economy.

According to CBP, a Center of Excellence and Expertise may handle, among other things, Entry Summaries, Petitions, Post-Summary Corrections, Revenue Collection, Temporary Importations under Bonds, Liquidations, and more. Customs also uses these centers to answer questions importers and companies might have regarding compliance.

Judy Staudt, Acting Center Director, Automotive & Aerospace Center of Excellence and Expertise, sent Easy ISF this saddening message:

Staudt’s interpretation of the rule agrees with the importers who believe that not being subject to the auto tariff means that you are still subject to the reciprocal tariff. Thus, me being charged 12.5 percent was proper.

So, what about those importers who are still paying 2.5 percent? Easy ISF warns that there is a non-zero chance that those people might receive a bill in the future:

We have received direct confirmation from the acting director in charge of all auto imports at CBP that these duties are required. Despite this, we have also seen many cars clearing customs only the 2.5% duty, and we have lost a significant number of importers to brokers who are not charging the tariff.

The thing to keep in mind is that the initial release is generally just to make sure the vehicle doesn’t have contraband or anything inadmissible. The actual, full entry review by CBP can take up to 314 days. Some people might get away with not having paid the duty, but many won’t. I guarantee we will see a lot of angry posts in the next few months of people getting hit with the missed duty.

Unfortunately, it’s hard to know for sure since this situation seems to change by the minute. Easy ISF is correct that CBP may take up to 314 days to process your entry, or long after you’ve picked up your goods from the port. Do everything right and CBP liquidates your entry, noting no change to the duty amount. The concern is if, during processing, CBP determines that you did not pay enough.

This is why Easy ISF believes that car import groups are bound to see some folks angry about getting hit with a bill months after they’ve imported their car.

This means that if you or your broker fill out your import paperwork correctly, your dream car is automatically 10 percent more expensive. While this won’t amount to much for a cheap Japanese Kei car, it will make a measurable difference on something pricy. It’s also notable that the 10 percent duty is a global one, unless there’s an even higher tariff slapped on the country that you’re importing from. I’ve used images of cars from Japan in this piece, but a car from Europe would also be hit with the duty.

But Wait, There’s More!

Sadly, I have more bad news for you to process. The President had previously delayed the rollout of his targeted reciprocal tariffs. You might remember that, back in the spring, President Trump had selected a 24 percent reciprocal tariff against all products from Japan. Thankfully, that tariff didn’t come.

On July 7, that changed when Trump got onto Truth Social to fire off a strongly worded letter to Japan, warning of a 25 percent reciprocal tariff that Trump says will go live on August 1. If Trump follows through with this, your dream cars from Japan will get 25 percent more expensive.

I’ll use myself as an unfortunate example here. The 1998 MGF that I purchased in June has a value of $2,435. Under the old 2.5 percent duty, that amounts to paying the government just $60.87. Under the current reciprocal tariff, which adds to the existing 2.5 percent duty, would have me paying 12.5 percent, or $304.37. If Trump’s threat against Japan goes live, my duty would jump to a total of 27.5 percent, or $669.62. As you can see, duties escalate quickly with tariffs.

If you have a car on a boat right now, like I do, there may or may not be a reprieve. Posts written on Truth Social are not law, so we have no idea what the official proclamation will look like. In April, CBP clarified that goods loaded onto a ship before April 5 (the launch of the 10 percent reciprocal tariff) would not be hit by the reciprocal tariff. Thus, there were cars that came to America after April 5 that did not get slapped with the 10 percent tariff.

Will CBP do the same for the Japan tariffs that were just announced? At this time, that is not clear. If that is the case, then when my MGF arrives on August 4 or August 6 it might just be hit by the current 12.5 percent duty, not the whopper of 27.5 percent.

Either way, this whole thing has been a mess and at times, it has felt nearly impossible to get anything resembling clear information. The message from the Automotive & Aerospace Center of Excellence and Expertise is the only thing remotely official that we’ve seen for months on whether your dream car should be dramatically more expensive or not. Sadly, this message seems to have put the debate to bed. If you want a cool car from another country, you will get caught up in the trade war. I’m sorry. At the very least, I still cannot wait for my MGF to show up early next month!

Update: We accidentally embedded the wrong letter from the White House. That has been corrected.