US tariffs on heavy trucks, buses come into effect

WASHINGTON: Fresh US tariffs on imports of medium- and heavy-duty trucks took effect Saturday, although with partial relief for vehicles entering the country under a key North America trade agreement.

The 25-percent tariff on trucks, alongside a 10-percent duty on buses, comes into place after President Donald Trump’s government launched a Section 232 probe into such imports to gauge their implications on national security.

The president has tapped such 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 steel and aluminum sectors have also been hit — with 50-percent tariffs — as were autos with a 25-percent duty.

However, the latest truck tariffs will not stack on existing duties applying to steel, aluminum copper, autos and lumber, the White House said in October.

Trucks will be spared from separate “reciprocal” duties setting out rates varying by trading partner too.

The American Trucking Associations, representing some 37,000 companies, urged in May for the Trump administration to hold off truck tariffs, warning that lower sales could harm manufacturers, dealers and motor carriers.

The vast majority of US truck imports come from its immediate neighbors Mexico and Canada, economists say.

A United Overseas Bank note in October estimated that heavy trucks from Mexico made up over 70 percent of US imports, while those from Canada constituted around 20 percent.

But with the new regime, trucks qualifying for favorable USMCA treatment will only see their non-US content hit with the 25-percent tariff.

Eligible truck parts will enter tariff-free as well until the Commerce Department establishes a process to target their non-US content.

But trade pressure has already taken a toll on Mexico, with its exports of heavy vehicles to the United States dropping almost 26 percent year-on-year in the January to August window.

The Mexican economy shrank 0.3 percent year-on-year in the third quarter, bogged down by weakness in the industrial sector.

Mexico remains in talks with the Trump administration to seek a deal to soften the impact of Trump’s wide-ranging tariffs.