Trade changes spur automotive scenario planning
Manufacturers continue to adapt
Dynamic trade policy has automotive companies continuing the approaches they temporarily put into place earlier this year. Trade policy task forces and “war rooms” continue, with assigned teams constantly assessing impacts and scenarios as announcements are made. Scenario planning can help to shorten reaction times by proactively considering what action to take for each potential tariff change.
As the Justice Department has announced strict enforcement of tariff violations, companies are also putting a renewed focus on compliance and having the tools and resources that allow them to make quick, confident adjustments to their tariff strategies.
This environment requires automotive manufacturers and suppliers to strategically optimise their supply chain network. Automakers are applying pressure to Tier 1 suppliers for concessions, which is causing a trickle-down effect across all tiers of the automotive supply chain to innovate, identify efficiencies and achieve cost savings.
The new C.H. Robinson U.S. Tariff Impact Analysis Tool helps our customers assess the duties on their imports, with data updated daily. Users can see tariff information not just by product code but by name, including where multiple tariffs apply to a single product. For one automotive customer, it revealed that 70% of their duty costs stemmed from a single tariff.
This enabled targeted analysis by country and product so they could identify strategies to reduce the expense. This complements the C.H. Robinson ACE Import Intelligence tool, which aggregates import entry data from all customs brokers a company works with for a consolidated view of duty spend.
New U.S. tariff on copper to have significant impact
Copper tariffs of 50% in effect as of 1 August 2025, will add significant costs to the automotive industry, which is already coping with complicated and additive tariffs. The average U.S. vehicle contains 55 pounds of copper, with a conventional gas-powered vehicle containing between 18 and 49 pounds and an average battery-powered vehicle containing approximately 81.65 kg. A fully electric bus contains over 367.41 kg of copper.
The tariff applies to all imports of semi-finished copper and products containing copper. If the product is subject to the automotive or auto parts tariffs imposed by the United States, then only the auto tariff applies. For example, an auto part imported from the Philippines is subject to the 25% auto parts tariff the United States imposed in May and would not additionally be subject to the copper tariff.
Conversely, compliance with the U.S.-Mexico-Canada Free Trade Agreement (USMCA) exempts auto parts from the 25% auto parts tariff and the 25% drug-related tariff imposed earlier in the year, but any applicable copper tariff on an auto part from Mexico or Canada is now 50%.
The United States received over 90% of its copper imports from Chile, Canada and Peru in 2024. During that same period, the United States mined approximately 1.1 million tons of copper, just under 50% of its consumption. In anticipation of the tariffs, the price of copper jumped on 8 July to $5.65 per pound, a 28% increase since the start of the year. After the initial jump, the price hovered around $5.50 a pound then dropped significantly upon the tariff announcement.
As cargo theft continues to be a challenge for shippers and carriers, copper is an attractive target. Shippers with cargo containing high volumes of copper should follow best practices related to phone and email communication, data sharing and carrier vetting to reduce risk.
U.S. tariff deals with Japan and South Korea
An agreement with Japan announced on 22 July, 2025, is significant for automotive supply chains given that it’s the No. 4 supplier of auto parts to the United States, accounting for 8% of imports.
While the White House’s fact sheet on the deal doesn’t address automotive tariffs and no official implementation details have been published, according to many reports the deal would lower tariffs on Japan-made vehicles and auto parts to 15% from 25%. A 15% tariff eliminates the threat of even higher rates, but is significantly above the 2.5% tariff on Japanese vehicles before the Trump administration.
Unlike a recently finalised deal with the UK, no automotive import quotas have been announced.
U.S.-based automakers are expressing concern about the agreement, believing that it favours Japanese imports over their vehicles, which face 50% tariffs on steel and aluminium imports and a 25% tariff on parts imported from certain countries.
An agreement with South Korea announced 30 July 2025, would also reportedly set tariffs on imported vehicles and auto parts at 15% instead of 25%. South Korea is the No. 5 supplier of auto parts to the United States.
Follow our Trade & Tariff Insights for more details as they emerge, including how steel and aluminium tariffs will be handled under the two deals.
U.S.-European Union tariff deal
A trade deal between the United States and the European Union was announced on 27 July, 2025, which would lower U.S. tariffs on imported vehicles and auto parts to 15% from 25%. No official implementation details have been published.
Europe’s automakers have expressed that 15%, while an improvement, will still significantly affect their bottom line. The German Association of the Automotive Industry estimates that the 15% tariff will cost German auto companies billions annually.
A 15% tariff is in contrast to the 10% tariff on vehicles and auto parts imported from the UK under a deal implemented in July.
Changes to tariffs on U.S. imports from Canada and Mexico
Tariffs intended to stem the flow of illicit drugs were raised to 35% on goods from Canada as of 1 August 2025. A similar increase to 30% for Mexican goods was also put forward. But as of 31 July, the White House announced that the drug-related tariff would remain at 25% for at least 90 days, through 30 October 2025.
Finished vehicles and auto parts compliant with the U.S.-Mexico-Canada Free Trade Agreement (USMCA) remain exempt.
Deadline for an agreement with China approaches
A 90-day lowering of 145% U.S. tariffs on Chinese-made goods expires 12 August 2025, but both the United States and China have indicated an extension is possible to allow for further negotiations.
While China is a major supplier of automotive parts to the United States, there has been a shift from China to Mexico and to Southeast Asia countries such as Vietnam. This trend was originally driven by rising labour costs in China but continues because of trade tensions between China and the United States.
Suppliers still anchored in China have a disadvantage to competitors that have adapted. In addition to any applicable steel, aluminium or copper tariffs, the following are in effect for Chinese automotive products as of this publish date:
- Electric vehicle tariff: 100% on imports from mainland China
- Section 301 tariff: Either 25% or 7.5% related to unfair trade practices
- Section 232 tariff: 25% on imported autos and auto parts due to national security concerns
- Fentanyl tariff: 20% on goods, including some auto parts, intended to kerb the flow of illegal drugs
- Reciprocal tariff: 10% on all goods
- Most favoured nation tariff: 2.5% applied to most goods including automobiles
Read about sourcing hierarchies and how to tailor one to your supply chain.