ITA Opens Auto Tariff Offset Program

Department of Commerce’s International Trade Administration (ITA) has opened the application process for automobile manufacturers to request tariff relief under the Import Adjustment Offset Program established by Presidential Proclamation 10925. The program aims to subsidize U.S. automobile assembly operations and reduce reliance on imported parts that the administration has deemed a national security risk.

Under the program, manufacturers with final assembly operations in the U.S. may apply for an offset against Section 232 tariffs imposed on automobile parts under Proclamation 10908.

Offsets will be calculated as a percentage of the total Manufacturer’s Suggested Retail Price (MSRP) of vehicles assembled domestically:

• 3.75% for eligible vehicles assembled between April 3, 2025 – April 30, 2026,
• 2.5% for those assembled between May 1, 2026 – April 30, 2027.

Offset amounts may be carried forward indefinitely but will not be granted for vehicles assembled after April 30, 2027. The offsets may only be used to reduce 25% Section 232 duties on covered parts, may not exceed the manufacturer’s total parts tariff liability, and are non-transferable.

Analysts note that while the program introduces tariff relief, it also adds significant administrative complexity. Automakers must forecast production, calculate MSRP aggregates, estimate direct and supplier tariff exposures, and track importer-of-record allocations precisely.

The offset mechanism, authorized by Proclamation 10925, is intended to “encourage companies to expand domestic production capacity, which is critical to a strong domestic defense industrial base,” according to the White House.

Emergency approval under the Paperwork Reduction Act has been requested to expedite implementation.

Procedures to Administer Import Adjustment Offset Amounts for Certain Imports of Automobile Parts