25% Tariff on Automobiles and Automobile Parts Begins April 3; USMCA Vehicles May Qualify for Partial Relief
Go-To Guide:
New 25% tariff on imported cars starts April 3, 2025, citing national security concerns.
Automobile parts from USMCA countries temporarily exempt, but full implementation expected by May 3, 2025.
USMCA-qualifying vehicles may receive partial relief based on U.S. content value.
Importers that do not carefully document U.S. content may face retroactive, full tariffs on misstatements.
On March 26, 2025, President Donald Trump announced a proclamation, “Adjusting Imports of Automobiles and Automobile Parts Into the United States,” directing the imposition of a 25% tariff on imports of passenger vehicles, light trucks, and certain automobile parts, citing national security concerns under section 232 of the Trade Expansion Act of 1962. The 25% duty will apply to designated Harmonized Tariff Schedule of the U.S. (HTSUS) codes listed in the proclamation’s annex, which will be published in the Federal Register at a later date.
U.S. Customs and Border Protection (CBP) will begin collecting duties on imports of covered automobiles at 12:01 a.m. EDT on April 3, 2025. Covered automobile parts will be subject to the same duty on a date to be determined, but no later than May 3, 2025.
Covered Products and Future Expansion
The proclamation applies the 25% tariff to passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans), light trucks, and selected automobile parts including engines and engine parts, transmissions and powertrain parts, and electrical components. The precise list of covered vehicles and parts (by HTSUS code) will be contained in the yet-to-be-published annex to the proclamation. Additional categories of automobile parts may be included over time. Domestic producers and industry associations may request the inclusion of other parts if they demonstrate that increased imports threaten to impair U.S. national security.
USMCA Automobiles: Partial Duty Based on US Content
The proclamation introduces a new content-based valuation system for qualifying automobiles under the United States-Mexico-Canada Agreement (USMCA). Importers of USMCA-qualifying automobiles may submit documentation supporting the value of U.S. content in a given model, defined as “the value of parts wholly obtained, produced entirely, or substantially transformed in the United States.” The 25% tariff will apply only to the automobile’s non-U.S. content, calculated as the vehicle’s total value minus the verified U.S. content.
Enforcement and Penalties for Misstatements
Importers should take note of deterrent measures built into the proclamation. If CBP determines that the declared non-U.S. content of a USMCA-qualifying automobile has been understated, the 25% tariff will apply retroactively and prospectively to the full value of the affected model. Specifically, duties will be retroactively assessed from April 3, 2025, and will continue to apply to all subsequent imports of the same model by the same importer until CBP verifies corrected values.
USMCA Automobile Parts: Temporary Exemption
USMCA-qualifying automobile parts are temporarily exempt from the 25% tariff. This exemption will remain in place until the secretary of Commerce establishes a process to calculate and apply the tariff only to the non-U.S. content of each part and publishes a notice in the Federal Register. In contrast, non-USMCA-qualifying parts will become subject to the full 25% tariff no later than May 3, 2025.
Other Implementation Measures: FTZs and Duty Drawback
Any automobile or automobile part subject to the 25% tariff and admitted into a U.S. foreign-trade zone (FTZ) on or after the effective date must be admitted in privileged foreign (PF) status—unless eligible for admission under domestic status (referring to goods that have been imported to the United States and for which all duties and taxes paid). Upon entry for consumption from the FTZ, the article will be subject to the duty rate applicable to its HTSUS subheading as of the admission date into the FTZ. Importers utilizing FTZs should review inventory and entry strategies, as this provision may reduce one of the traditional benefits of FTZ operations.
Additionally, duty drawback will not be available for the new 25% tariffs. Companies seeking to recover duties through export programs will not be able to claim refunds for these duties, even if the automobile or part is subsequently exported. This may affect cost planning for companies with international supply chains and re-export strategies.
Key Takeaways: Automobiles
1.
Effective at 12:01 a.m. EDT on April 3, 2025, covered imports of passenger vehicles and light trucks will be subject to a 25% duty on entry or withdrawal from warehouse for consumption.
2.
USMCA-qualifying automobiles may receive a partial exemption, with the 25% duty applied only to the non-U.S. content of each model.
3.
Understatement of non-U.S. content will trigger full-duty liability on the total value of all affected models, retroactive to April 3, 2025, and continuing until CBP verifies corrected values.
4.
Importers must maintain thorough documentation of U.S. content and be prepared for CBP audits and potential enforcement actions.
5.
Additional automobile parts may be added to the tariff schedule based on industry petitions and agency determinations.
Key Takeaways: Automobile Parts
1.
A 25% duty will apply to covered automobile parts—engines, transmissions, and electrical components—no later than May 3, 2025.
2.
USMCA-qualifying parts are temporarily exempt until Commerce and CBP establish a U.S. content-based valuation system.
3.
Additional automobile parts may be included under the tariff regime upon petition by domestic producers or industry groups.
4.
Importers should prepare for heightened CBP scrutiny on valuation and content origin, especially for complex supply chains involving USMCA-qualifying parts.
Stephanie Vélez contributed to this article
Pedestrian Fatalities Up Almost Half from a Decade Ago
During the first half of 2024, drivers killed 3,304 pedestrians in the United States, a 2.6% decrease from the same period in 2023, according to a new study from the Governors Highway Safety Association (GHSA). However, this decline does not overshadow the alarming trend of rising pedestrian fatalities over the past decade, which have increased by 48% since 2014, translating to 1,072 more deaths.
Pedestrian Fatality Trends
Each year, the GHSA releases the first comprehensive look at pedestrian traffic death trends for the first six months of the year, using preliminary data from State Highway Safety Offices (SHSOs). The analysis indicates that while pedestrian fatalities decreased slightly from last year, they remain 12% higher than in 2019, emphasizing a concerning trajectory for road safety.
The slight decrease in pedestrian fatalities in early 2024 aligns with a broader trend in overall traffic deaths. According to the National Highway Traffic Safety Administration (NHTSA), total roadway fatalities dropped 3.2% during the first half of 2023. Nevertheless, the overall numbers remain significantly higher than those recorded five and ten years ago. In the first half of 2024, there were 18,720 roadway deaths, showing a 10% increase from 17,025 in the same period of 2019 and a 25% rise from 15,035 in 2014.
At the state level, the GHSA report reveals mixed results: pedestrian fatalities decreased in 22 states, while 23 states and the District of Columbia (D.C.) saw increases. Five states reported no change in their numbers. Notably, seven states experienced consecutive decreases in pedestrian fatalities, whereas four states faced two significant increases.
Why Are Roads So Dangerous for Pedestrians?
There is a combination of factors contributing to this rising danger for pedestrians. A decline in traffic enforcement since 2020 has allowed dangerous driving behaviors—such as speeding, distracted driving, and driving under the influence—to grow rapidly. Additionally, many roadways are designed primarily for fast-moving vehicles, often neglecting the needs of pedestrians. Many communities lack infrastructure – such as missing sidewalks and poorly lit crosswalks – that also help protect pedestrians. Furthermore, the growing presence of larger, heavier vehicles on roads increases the risk of severe injuries or fatalities in pedestrian accidents.
What Can Be Done?
To tackle this pedestrian safety crisis, the GHSA advocates for an approach that establishes a strong safety net that can protect everyone on the road. A crucial part of this strategy is traffic enforcement focused on dangerous driving behaviors – like speeding, and impaired or distracted driving – that disproportionately endanger pedestrians.
In summary, while there are signs of progress in addressing pedestrian safety, the statistics reveal a pressing need for ongoing efforts to protect those who walk on our roads. By strengthening enforcement, improving infrastructure, and promoting safe practices among both drivers and pedestrians, we can work toward reversing this tragic trend and ensuring safer streets for everyone.
The Chapter 93A Hurdle: Mass. Court Rejects ‘Artificial Price Inflation’ Claims in Energy Marketing Lawsuit
In Ortiz v. Eversource Energy, a putative class action, plaintiffs brought suit against Eversource Energy alleging that Eversource knowingly marketed natural gas and related services as clean and safe for residential consumers and the environment despite knowing this was not true. Allegedly, Eversource knowingly issued communications that were purposefully misleading and inconsistent with scientific studies. Plaintiffs further allege that had they known the truth about the health and environmental risks associated with the natural gas, they would not have purchased the gas.
Plaintiffs sought (1) a declaration that defendant’s promotional and advertising of its natural gas contained unlawfully false, misleading, and/or deceptive statements; (2) an order enjoining defendant from promoting and marketing its natural gas using such unlawfully false, misleading, and/or deceptive statements; and (3) an order that defendant be required to make reasonable and regular corrective disclosures to plaintiffs and the putative class members that accurately describe the potential health and safety risks. Plaintiffs also sought monetary damages under Chapter 93A.
Defendant moved to dismiss the complaint for failure to state a claim. Paying for a product whose price was artificially inflated by deceptive advertising is a recognized economic injury cognizable under Chapter 93A; however, a plaintiff may not base the claim on speculative harm or risk of economic damages. Here, plaintiff did not allege that the natural gas they purchased from Eversource was functionally deficient or that they suffered any adverse health effects from the natural gas they purchased. To the contrary, plaintiffs claimed they were harmed when they had been misled regarding the environmental and health risks of the gas. In other words, plaintiffs paid too much for the gas they received. However, the Massachusetts Superior Court noted that pursuant to the current regulatory regime in Massachusetts, the Department of Public Utilities has the exclusive power to regulate operations, service, and rates. Thus, as the rates Eversource charged were not entirely within its control, the connection between the purported false statements and the costs plaintiff incurred was too attenuated to serve as a cognizable injury. Plaintiff was unable to establish that they would have paid a lower price for natural gas had it been honestly advertised.
High Court Upholds Use of Omnibus Claims in Mass Motor Finance Litigation
A recent High Court decision in claims brought by thousands of claimants against motor finance providers has reaffirmed the validity of using omnibus claim forms in large-scale consumer litigation. The ruling has implications both for the many motor-finance mis-selling claims pending before the courts and also for mass claims in a variety of other contexts.
Background
The case involved eight omnibus claim forms issued on behalf of over 5,800 claimants against eight defendants. While the claims were at an early stage procedurally, the core allegations were that the defendants had paid undisclosed, variable commissions to motor finance brokers (car dealers), creating conflicts of interest which the claimants argued rendered the ensuing credit agreements unfair under Section 140A of the Consumer Credit Act 1974 (CCA).
Shortly after the claims were issued, and before filing any defence, the defendants objected to the use of omnibus claim forms and invited the court to sever the claims, such that the claimants’ solicitors would need to issue a separate claim form (and pay a court fee) for each claim.
Initially, a County Court judge ruled that the claims should be severed into individual cases, following Abbott v Ministry of Defence [2023] 1 WLR 4002. This would have required a separate claim form to be issued (and court fee paid) for each case. The claimants appealed, arguing that the claims could and should more appropriately be commenced under omnibus claim forms, as contemplated by CPR 7.3 and CPR 19.1.
Key Legal Considerations
CPR 7.3 allows a single claim form to be used for multiple claims if they can be “conveniently disposed of” in the same proceedings. CPR 19.1 provides that any number of claimants may be joined as parties to a claim.
In Morris v Williams & Co Solicitors [2024] EWCA Civ 376 the Court of Appeal clarified that no gloss should be put on the words of CPR 7.3 and 19.1, which should be given their ordinary meaning. The exclusionary “real progress,” “real significance,” and “must bind” tests proposed in Abbott were factors to consider but should not be viewed as exclusionary tests – the omnibus claim form jurisdiction was not as restrictive as the Group Litigation Order regime in CPR 19.21-28, and should not be treated as “GLO-light”. Abbott was overruled.
Factors Supporting Omnibus Claims
The High Court carried out a detailed analysis of the factors to be taken into account in deciding whether the claims could conveniently be disposed of together per CPR 7.3. Key points cited in favour of allowing omnibus claims to proceed included:
The large number of claimants and small number of defendants.
The claims arose from the same or similar transactions, with broadly common allegations and the same legal causes of action, raising a number of common legal and factual issues.
The likelihood that case managing the cases together by way of lead or test cases would likely facilitate the disposal of many or all of the following cases. Whereas if separate claims were issued it would be random chance which claims were heard first and whether they were appropriate test cases.
Managing the claims together would be more efficient and just, in line with the CPR 1.1 overriding objective. Costs would likely be saved overall, and court time would likely be reduced. The imbalance of financial power between individual claimants and defendants would be mitigated. There were advantages to omnibus claims management in terms of the timing and usefulness of disclosure, and the availability of expert evidence.
Practical Implications
For Defendants facing mass claims this ruling will be a concerning precedent for the use of omnibus claim forms by claimants as a strategy, with obvious advantages for claimant law firms in terms of cost, use of case management applications to gain early disclosure, and selection of common issues and test cases.
For Claimants and their advisers the decision will encourage the use of omnibus claims over the impracticality of litigating individual cases, and the relative restrictiveness of the GLO regime.
For the Courts omnibus claim forms could see large volumes of individual claims taken out of the County Courts and case managed collectively and in a less haphazard fashion than has so far been the case, with potential for many following cases to be settled out of court once lead claims have been determined. This may help with significant delays and backlogs often experienced in the County Courts.
Wider Significance
The significance of this decision in the context of motor finance claims may to some extent be rendered moot by the outcome of the Supreme Court appeal in Johnson v FirstRand and the FCA’s decision on a whether and to what extent to impose a consumer redress scheme. But in reaffirming the broad scope and flexibility of CPR 7.3 and 19.1, the ruling may pave the way for more mass claims in financial services and other contexts.
New U.S. Import Tariffs on Certain Automobiles and Parts
On March 26, 2025, President Trump signed an executive order directing new 25% tariffs on certain automobiles and automobile parts imported into the U.S. from all countries on or after April 3, 2025. This executive order comes as businesses await the outcome of the broader reciprocal trade plan also expected to be released on April 2.
The executive order builds on an investigation undertaken during President Trump’s first term focused on U.S. imports of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans and cargo vans), light trucks (collectively, automobiles) and certain automobile parts (engines and engine parts, transmissions and powertrain parts and electrical components — collectively, automobile parts) and their effect on the national security of the U.S. under Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862) (Section 232). When the U.S. Department of Commerce (DOC) issued findings and recommendations to the President in February 2019, the President did not take any tariff action in response to the DOC’s determination that those imports threatened to impair the national security of the United States. Now, however, President Trump has determined that changes in import trends since the initial investigation and 2019 report have exacerbated risks to U.S. manufacturing, noting that “[t]oday, only about half of the vehicles sold in the United States are manufactured domestically[.]”
These new 25% tariffs, building on the prior investigation, will largely be effective for certain automobiles (to be identified in a subsequent notice in the Federal Register) on or after 12:01 a.m. Eastern Daylight Time on April 3, 2025. The effective date for parts could be deferred; the executive order specifies an effective date to be published in the Federal Register “but no later than May 3, 2025.
Automobiles and parts eligible for the U.S.-Mexico-Canada free trade agreement (USMCA) preferential treatment will be treated differently than all other imports. Where automobiles qualify for preferential tariff treatment under USMCA, importers of those automobiles may be permitted to submit documentation identifying or substantiating the amount of U.S. content in each model imported into the United States and pay duties only on the remainder. Where automobile parts qualify for preferential treatment under USMCA, those parts will be exempted from duties until such time that the DOC, in consultation with Customs, establishes a process to apply the tariff exclusively to the value of the non-U.S. content of such automobile parts and publishes notice in the Federal Register. “U.S. content” refers to the value of the automobile attributable to parts wholly obtained, produced entirely or substantially transformed in the United States.
The duties imposed by this order will be supplemental to duties on imports already imposed pursuant to other legal tools, including IEEPA (e.g. Canada, China and Mexico), Section 232 of the Trade Expansion of 1962 (e.g. steel and aluminum), Section 301 of the Trade Act of 1974 (e.g. China) and any other authority.
These duties will be imposed concurrent with other action taken under the President’s Reciprocal Trade Plan, which is expected to announce new tariffs on April 2, 2025, and with any new tariffs imposed under the President’s March 25, 2025 executive order granting the State Department discretion to impose 25% import duties on U.S. imports from countries that themselves import Venezuelan oil on or after April 2, 2025.
Pennsylvania’s Proposed Ban on Driver’s Licenses for Undocumented Immigrants: What It Means for the Commonwealth
Pennsylvania is once again at the center of a heated political debate—this time over a proposed constitutional amendment that could ban undocumented immigrants from obtaining driver’s licenses. The proposal, which has sparked polarized responses, is expected to stir discussions in the state legislature and beyond. In this post, we’ll explore the background of the amendment, the political arguments on both sides, and the potential economic, legal, and societal impacts if the amendment is enacted.
Background: Understanding the Proposed Amendment
The proposed amendment seeks to change Pennsylvania’s constitution to prohibit undocumented immigrants from obtaining driver’s licenses. This amendment would mark a shift in state policy, as some states currently allow undocumented residents to obtain licenses as part of efforts to enhance road safety and improve identification records. The push for the amendment has largely been driven by Republican lawmakers who argue that the change is necessary to uphold immigration laws and protect public resources. By elevating the issue to the level of a constitutional amendment, proponents aim to make it more difficult for future legislatures to reverse the policy.
The Political Debate: Pros and Cons
As with many immigration-related issues, the debate over driver’s licenses for undocumented immigrants has divided opinions along political lines.
Arguments in Favor of the Amendment
Upholding Immigration Laws: Supporters argue that granting licenses to undocumented immigrants undermines federal immigration laws and could incentivize illegal immigration.
Preventing Voter Fraud: Some proponents claim that driver’s licenses could be used to improperly access voting systems, despite existing safeguards.
Resource Allocation: Advocates contend that public resources should prioritize legal residents and citizens.
Arguments Against the Amendment
Enhancing Road Safety: Opponents point out that allowing undocumented immigrants to obtain licenses can improve road safety by ensuring that all drivers are tested, insured, and educated about traffic laws.
Economic Impact: Undocumented immigrants play a vital role in Pennsylvania’s economy, particularly in industries like agriculture and construction. Restricting access to driver’s licenses could limit their ability to work and contribute to local economies.
Humanitarian Concerns: Critics argue that the amendment could create unnecessary hardships for immigrant families who rely on driving to access essential services, including healthcare, education, and employment.
Potential Economic and Societal Impacts
The implications of the proposed amendment could be far-reaching, affecting various aspects of life in Pennsylvania.
Workforce Participation: Limiting access to driver’s licenses could reduce the mobility of undocumented workers, making it harder for employers to fill essential jobs. This, in turn, could impact productivity and economic growth.
Public Safety: Studies from other states have shown that providing driver’s licenses to undocumented immigrants can lead to fewer hit-and-run accidents and lower overall crash rates. Without access to licenses, some immigrants may drive without proper training or insurance, potentially increasing safety risks.
Social Integration: Driver’s licenses are often a key tool for social integration, allowing individuals to participate more fully in their communities. The amendment could deepen divides and contribute to a sense of marginalization among immigrant populations.
Legal Implications: The Road Ahead
For the proposed amendment to become law, it must go through a multi-step process. First, it needs to be approved in two consecutive sessions of the Pennsylvania General Assembly. Then, it must be presented to voters in a statewide referendum. This process could take several years, providing ample opportunity for public debate and advocacy on both sides.
If the amendment is ultimately approved, Pennsylvania would join a growing number of states that have implemented restrictions on driver’s licenses for undocumented immigrants. However, legal challenges could arise, particularly if the amendment is seen as conflicting with federal policies or constitutional protections.
So…What’s at Stake for Pennsylvania?
The debate over driver’s licenses for undocumented immigrants touches on complex issues of law, economics, and social justice. As the legislative process unfolds, Pennsylvanians will need to weigh the potential benefits and drawbacks of the proposed amendment and consider its broader implications for the state’s future.
Regardless of the outcome, one thing is clear: this issue is not just about driver’s licenses—it’s about who we are as a society and how we choose to balance the principles of law enforcement, economic prosperity, and human dignity.
Ninth Circuit Clarifies Amount in Controversy Requirement in Declaratory Judgment Actions Between Insurers and Their Insureds
Plaintiff’s counsel often employ a range of strategic tactics to defeat diversity jurisdiction because they view federal court as an unfavorable forum. One such tactic is to challenge the amount in controversy—a key requirement for diversity jurisdiction. However, the Ninth Circuit’s recent decision in Farmers Direct Property & Casualty Ins. Co. v. Perez, — F.4th —, 2025 WL 716337 (9th Cir. March 6, 2025), makes it difficult to challenge the amount in controversy in declaratory judgment actions filed in federal court involving an insurer’s duty to defend and/or indemnify. In Perez, the Ninth Circuit held that in determining the amount in controversy, district courts may consider (i) the insurer’s potential excess liability and (ii) defense fees and costs that the insurer might incur in the underlying action.
Perez arose out of a January 2017 auto accident between Montez and Perez, who was insured by Farmers Direct. Montez, made a policy limit demand, conditioned on an affidavit from Perez that he did not have any other insurance. Farmers Direct offered to pay its $25,000 policy limit but explained that it was unable to reach Perez to obtain an affidavit.
Montez did not accept the policy limit and filed a personal injury lawsuit against Perez in state court. Farmers Direct provided a defense, but Perez would not communicate with defense counsel and was uncooperative in his own defense. Eventually, judgment was entered against Perez for more than $11 million.
Before the state court judgment was entered, Farmers Direct filed a declaratory judgment action against Perez in federal court, seeking a declaration that it had no duty to defend and indemnify Perez because he had breached the policy’s cooperation clause. When Perez did not respond to the complaint, the district court entered a default judgment against him and found that Farmers Direct had no continuing duty to defend and no duty to indemnify Perez.
Montez intervened in the federal action to set aside the default judgment, arguing that given the face amount of the policy, the amount in controversy requirement was not satisfied. The district court agreed, found it did not have subject matter jurisdiction, and vacated the judgment.
Farmers Direct appealed, and the Ninth Circuit reversed. The court concluded that the amount in controversy was not limited to the policy’s $25,000 limit. Rather, in determining the amount in controversy, the district court was required to take into account (i) Montez’s contention that Farmers Direct should be liable for the excess amount of the underlying personal injury judgment and (ii) Farmers Direct’s ongoing defense costs in the underlying tort action. Because there was a legal possibility that Farmers Direct could be liable for these amounts, each of which exceeded $75,000, the panel held that the district court erred in vacating the default judgment and remanded the matter for further proceedings.
Foley Automotive Update 19 March 2025
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Special Update — Trump Administration and Tariff Policies
Foley & Lardner partner Kathleen Wegrzyn addressed a number of FAQs regarding force majeure and price increases amid the current turbulent tariff landscape.
Key tariff announcements include:
President Trump on March 17 told reporters that “in certain cases, both” 25% sector-specific tariffs as well as unspecified “reciprocal tariffs” could apply on U.S. imports beginning April 2. U.S. imports that have been traded duty-free under the United States-Mexico-Canada Agreement (USMCA) are exempt — until April 2 — from the 25% tariffs on goods from Mexico and Canada that were announced on March 4.
Following the implementation of 25% tariffs on U.S. imports of steel and aluminum, Canada on March 13 imposed levies on C$29.8 billion in U.S. imported goods. This follows 25% tariffs on C$30 billion of products Canada announced on March 4.
Mexican President Claudia Sheinbaum thus far has not moved forward with a plans to apply retaliatory tariffs on U.S. imports.
The European Union intends to reinstate 2018 and 2020 countermeasures on April 1 against a range of U.S. goods, with a more extensive retaliatory tariff package planned for later next month.
China imposed tariffs on U.S. goods including large-engine vehicles, as well as export and investment controls on over two dozen U.S. firms after the Trump administration applied 20% duties on Chinese imports.
Automotive Key Developments
Analysis from S&P Global Mobility indicates the disruptive effects of 25% tariffs on all vehicle imports could potentially reduce North American production “by up to 20,000 units per day within a week.” S&P predicted a 50% probability for a tariff-related “extended disruption scenario” this year, during which certain high-profile vehicles “will slow or cease production.”
MichAuto and AlixPartners described volatile tariff policies as “crippling” and “debilitating” for the automotive industry and noted the ongoing uncertainty has already damaged OEMs’ and suppliers’ ability to make investment and product decisions.
Statements from MEMA and the American Automotive Policy Council emphasized the potential for significant cost increases for automakers, suppliers, and consumers resulting from the 25% tariffs on U.S. imports of steel and aluminum. In addition, a recent survey by the vehicle suppliers association found 97% of respondents had concerns regarding increased financial distress among sub-tier suppliers due to the announced tariffs, and over 80% of surveyed suppliers are exposed to steel and aluminum derivative tariffs.
Tariffs on steel and aluminum could raise costs up to$400 to $500 per vehicle on average, with the potential for greater impact on larger, aluminum-intensive vehicles such as the Ford F-150 pickup.
Relocating an assembly line between existing facilities can take up to eight months, and an automaker would likely need up to three years or longer to fully staff and significantly build out new U.S. manufacturing capacity.
Ford is reported to be amassing inventories of USMCA-compliant parts to mitigate the effects of tariffs, and the automaker has told its suppliers to keep shipping under existing terms, according to an update from Crain’s Detroit.
Automotive News assessed the exposure of certain EV brands to the impact of U.S. import tariffs.
University of Michigan economists projected U.S. new light-vehicle sales will reach 16.3 million units in 2025, while noting the projections have “substantial uncertainty” due to trade policy volatility. The economists also expect steel and aluminum tariffs to “raise production costs in the automotive supply chain,” and the levies could reduce Michigan’s employment by approximately 2,300 jobs by 2026.
Preliminary discussions concerning the renewal of the USMCA suggested a revised pact could result in higher tariffs for non-compliance, according to unidentified sources in The Wall Street Journal.
The Environmental Protection Agency on March 12 announced 31 deregulatory actions that include the reconsideration of the Biden administration’s emissions standards for light-duty, medium-duty and heavy-duty vehicles.
OEMs/Suppliers
While tariffs in the U.S., Canada, and the EU may continue to impede sales by Chinese automakers in the near term, market share is rising in emerging markets for Chinese brands that include BYD, Great Wall Motor, Chery Automobile, and SAIC Motor Corp.
Volkswagen intends to reduce production and headcount at its Chattanooga, Tennessee plant to support cost-cutting initiatives and in response to lower EV demand. Planned layoffs across VW Group have reached nearly 48,000 globally, including a 30% headcount reduction at its Cariad software unit by the end of this year.
Ford will invest €4.4 billion ($4.8 billion) in its German operations, in an effort to boost sluggish sales in Europe.
Nissan named Ivan Espinosa, currently serving as Chief Planning Officer, to succeed CEO Makoto Uchida, effective April 1.
Market Trends and Regulatory
U.S. new light-vehicle inventory reached 3 million units at the beginning of March, representing an 89-day supply industrywide, according to analysis from Cox Automotive.
The percentage of subprime auto borrowers at least 60 days past due on their loans reached 6.56% in January, representing the highest level in over 30 years, according to data from Fitch Ratings. The share of auto loans in serious delinquency across all borrower types was 2.96% in the fourth quarter of 2024, compared to 2.66% in Q4 2023 and 2.22% in Q4 2022.
Kelley Blue Book estimates that new-vehicle sales incentives were up 18.6% year-over-year in February 2025. The average incentive package last month reached 7.1% of average transaction price, or $3,392, compared to 6% of ATP in February 2024.
U.S. Senate Republicans introduced the Preserving Choice in Vehicle Purchases Act (S. 2090) to “prevent the elimination of the sale of motor vehicles with internal combustion engines” by limiting the Environmental Protection Agency’s issuance of certain Clean Air Act waivers.
GM has again applied with the Federal Deposit Insurance Corp. to establish an industrial bank, and this would enable the automaker to hold deposits and expand their financial offerings to consumers, dealerships, and employees. Stellantis and Ford have also recently submitted applications for banking licenses.
U.S. House lawmakers included language in an amendment to the Full-Year Continuing Appropriations and Extensions Act that effectively “removes the ability for any House members to use an expedited process” to compel a vote for the remainder of this calendar year on whether to terminate the national emergency declaration utilized as the basis to pursue tariffs on imports from Canada and Mexico. The “continuing resolution” (CR) to fund the federal government through the rest of the fiscal year 2025 was signed by the president on March 15, 2025.
Autonomous Technologies and Vehicle Software
Industry organizations, including the Alliance For Automotive Innovation, urged the Department of Transportation to establish a national framework to support the deployment of autonomous vehicles.
NVIDIA will collaborate with GM and Magna to advance next-generation vehicle technologies. NVIDIA has described artificial intelligence technologies in the auto industry as a “trillion-dollar opportunity.”
GM named Barak Turovsky, formerly of Cisco and Google, as its first Chief Artificial Intelligence Officer.
Ford announced tech veteran Mike Aragon will join the company as President, Integrated Services. The position is expected to support the automaker’s goals to boost revenue from software-enabled subscriptions and features.
Autonomous trucking startup Bot Auto plans to begin its first driver-out commercial freight pilot program in Texas this year, on routes between Houston and San Antonio. Houston-based Bot Auto was founded in 2023 by former TuSimple CEO Xiaodi Hou.
Electric Vehicles and Low-Emissions Technology
Over 50% of new EV purchases in the fourth quarter of 2024 were leases, and EVs accounted for nearly 20% of all new vehicle leases during the quarter, according to data from Experian released this month.
BYD plans to launch new charging technology on certain models in China next month that will enable 400 kilometers (249 miles) of range with five minutes of charge time, or roughly the same duration required to refuel comparable gas-powered models.
Cadillac intends to begin production of the electric 2026 Cadillac Escalade IQL in mid-2025 at GM’s Factory Zero electric vehicle assembly plant in Detroit.
Volkswagen recently debuted its ID Every1 electric minicar concept, and the low-cost EV will be the brand’s first model to use software from the automaker’s joint venture with Rivian.
Isuzu will invest $280 millionto establish a commercial EV plant in Piedmont, South Carolina.
UAW members ratified their first labor agreement at the Ultium Cells joint venture battery plant in Spring Hill, Tennessee.
SK On will supply Nissan with nearly 100 gigawatt-hours of batteries from 2028 to 2033, to support future EV models produced at the automaker’s Canton, Mississippi plant.
Stellantis will invest €38 million ($41 million) to produce EV engine parts at its Verrone transmissions plant in Italy.
Analysis by Julie Dautermann, Competitive Intelligence Analyst
Distracted Driving Laws and Penalties: What You Need to Know
As Distracted Driving Awareness Month approaches in April, we are reminded to adhere to distracted driving laws, aimed at making our roads safer for everyone year-round. With an increase in smartphone use and other distractions, it’s essential to be aware of the laws and penalties surrounding distracted driving. In this post, we’ll break down distracted driving laws and the consequences.
What is Distracted Driving?
Distracted driving is any activity that diverts attention from driving including texting, talking on the phone, eating, changing the radio, or even chatting with passengers. According to the Michigan Office of Highway Safety Planning, distracted driving is a factor in thousands of crashes each year.
The Laws
While distracted driving laws can vary by state, there are some common elements that many states share:
1. Texting While Driving
Most states have strict laws against texting while driving. The most dangerous form of distracted driving is texting, since it requires visual, manual, and cognitive attention.
Michigan has a primary enforcement law for texting, which means law enforcement can stop and ticket a driver solely for texting, even if no other traffic violation has occurred.
2. Use of Hands-Free Devices
While some states allow the use of hands-free devices, others have restrictions. It’s important to familiarize yourself with local laws regarding Bluetooth or other hands-free technologies to avoid fines.
3. Other Distractions
Driving while distracted by activities such as eating, grooming, or interacting with passengers can also be penalized, especially if these actions lead to dangerous driving behavior.
Penalties for Distracted Driving
The penalties for distracted driving can vary significantly depending on the specific violation. Common consequences include:
1. Fines
Many states impose fines for distracted driving offenses. These can range from $50 to several hundred dollars, depending on the severity of the violation.
2. Points on Your License
Distracted driving can lead to points being added to your driving record. Accumulating too many points can result in higher insurance rates and even license suspension.
3. Increased Insurance Premiums
Insurance companies often raise premiums for drivers with distracted driving citations. Over time, this can lead to a significant financial burden.
4. Potential Criminal Charges
In severe cases, especially if distracted driving leads to an accident with injuries or fatalities, the driver may face criminal charges. This can result in hefty fines, community service, or even jail time.
Stay Focused
Here are some tips to help minimize distractions and stay vigilant behind the wheel:
Put your phone away: Consider using “Do Not Disturb” mode while driving.
Plan ahead: Set your GPS and music before you start driving.
Avoid multitasking: Eat before you drive, and save interactions with passengers for when you’re parked.
Conclusion
Understanding distracted driving laws and their penalties is vital for all drivers. By staying informed and committed to safe driving practices, you contribute to safer roads for everyone
Arkansas Attorney General Sues GM and OnStar Over Alleged Privacy Violations
On February 26, 2025, the Attorney General of Arkansas filed a lawsuit against General Motors Co. (“GM”) and its subsidiary, OnStar LLC (“OnStar”), alleging deceptive trade practices related to the collection and sale of drivers’ data. The complaint alleges that GM and OnStar gathered detailed driving data (including precise geolocation data, GM app usage data, and information about consumers’ driving behavior (e.g., start time, end time, vehicle speed, high-speed driving percentage, late-night driving percentage, acceleration data, braking data, and distance driven)) from over 100,000 Arkansas residents without their consent and sold it to third-party data brokers. The data brokers then allegedly sold the data to insurance companies, which used the data to deny coverage or increase insurance rates for consumers. The complaint asserts that GM and OnStar collected and sold the consumer data to generate additional revenue for the companies. The Arkansas Attorney General is seeking monetary damages, injunctive relief, and attorneys’ fees and expenses.
This lawsuit follows actions by the FTC and the Texas Attorney General over similar data-sharing allegations, and is part of a larger trend of state regulators examining the privacy practices of connected vehicle manufacturers.
What Honda’s CCPA Penalty Means for Your Privacy Compliance
The California Privacy Protection Agency (CPPA) has reached a settlement with American Honda Motor Co., Inc. (Honda), as outlined in this Order of Decision. The Order is the CPPA’s first public enforcement action involving a significant monetary penalty of $632,500, arising from its investigation into the privacy practices of connected vehicle manufacturers that began in July 2023.
The CPPA asserted that Honda violated the California Consumer Privacy Act (CCPA) by requiring consumers to undergo an extensive identity verification process, including for requests where verification is not permitted under the CCPA. Honda’s process for accepting data subject requests through authorized agents also included unnecessary and non-permitted steps.
Additionally, the CPPA asserted that Honda’s cookie management platform violated the CCPA, as it required a two-step process for opting out of advertising cookies and tracking technologies while consenting (or reconsenting) to cookies required just a single click, making it more burdensome to opt out of, rather than consent to such data processing. Honda was also unable to produce any of its contracts with third party advertising vendors to show that they were implementing the required contractual provisions under the CCPA.
To resolve the CPPA’s allegations, Honda has agreed to pay $632,500 in monetary penalties and revise its privacy practices, including implementing a simpler process for consumers to exercise their privacy rights, minimizing data collection for verification purposes and modifying its contract management and tracking processes.
The CPPA’s Order signals an intent to hold businesses accountable for their data subject request processes. Below are some steps you can take to ensure compliance and mitigate the risk of similar penalties:
Revisit your process for responding to data subject requests and ensure that your verification process is appropriately tailored.
Review (or implement) a process for receiving, verifying and responding to data subject requests.
Review your contracts with vendors to confirm they include the required provisions.
Assess (or implement) your cookie management platform to ensure opt-out processes are simple and symmetrical.
New U.S. Regulations on Vehicle Connectivity and Automated Driving Systems: Compliance Starts Now!
Starting today, March 17, 2025, new U.S. regulations impose sweeping restrictions on the importation and sale of connected vehicles (CV) and related components with ties to China and Russia. Issued by the Bureau of Industry and Security (BIS), the Connected Vehicles Rule (CV Rule) aims to curb potential national security threats posed by foreign-made vehicle connectivity and automated driving systems. These restrictions, which will be phased in over the coming years, require businesses to conduct rigorous supply chain assessments and file compliance declarations. Importers and manufacturers must act now to ensure compliance and avoid steep penalties for violations.
Key components of the CV Rule are as follows:
Controls. The CV Rule focuses on two main categories: vehicle connectivity systems (VCS) and automated driving systems (ADS). VCS includes hardware and software that “directly enables” the transmission, reception, or processing of radio frequencies over 450 MHz. ADS encompasses hardware and software capable of performing the entire dynamic driving task for a connected vehicle.
Scope. Consistent with the Notice of Proposed Rulemaking published in September 2024 (NPRM), the CV Rule prohibits the import or sale of CVs and VCS hardware or ADS with a defined nexus, significant connection, or association to the People’s Republic of China (PRC) and Russia. This means the CV, VCS, or ADS was either (i) manufactured in the PRC or Russia, (ii) developed by companies based in the PRC or Russia, or (iii) supplied by entities with substantial ties to the PRC or Russia.
Implementation. Starting with Model Year (MY) 2027 for covered software and MY 2030 for VCS hardware, the CV Rule will be gradually implemented over the next several years to minimize supply chain disruptions. Specifically, the CV Rule will not apply to legacy software and components designed, developed, manufactured, or supplied in or from the PRC or Russia prior to March 17, 2026.
Declarations. Importers should conduct a supply chain assessment to document the origin of all hardware and software used in a connected vehicle. This supply chain assessment will allow for the identification and mitigation of risks while forming the basis for the BIS Declarations of Conformity (Declarations). BIS will require Declarations from importers and CV manufactures to certify compliance annually prior to importing or selling CVs with VCS hardware or covered software in the US.
Declarations may be filed using forms to be made available on the BIS website and should include:
Confirmation that the VCS hardware or covered software is not designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia.
The importer has conducted due diligence to inform the Declaration and maintains supporting documents.
The importer has taken all possible measures to ensure all information is furnished to the BIS upon request.
The importer will submit material changes to Declarations within 60 days.
The importer will maintain records for 10-years.
Authorization. The BIS will issue general authorizations for parties to engage in otherwise prohibited transactions, provided the party meets certain conditions. The general authorizations and conditions will be published on the BIS website. Expected general authorizations include exemptions for (i) small businesses, (ii) CVs not used on public roads, (iv) CVs imported for display, testing, or research, and (iv) CVs imported for repair. Specific authorizations may also be provided by the BIS following an application and approval process. These specific authorizations may be granted for higher-risk transactions, where importers and manufacturers apply to the BIS for permission to engage in transactions that would otherwise be prohibited.
Advisory Opinions. Importers and manufacturers that remain unsure whether a transaction is subject to a prohibition or requirement under the CV Rule may request an Advisory Opinion from the BIS’s Office of Information and Communications Technology and Services.
Penalties. Persons who violate, attempt to violate, conspire to violate, or knowingly cause a violation of the CV Rule may be subjected to civil and/or criminal penalties under the International Emergency Economic Powers Act. The maximum civil penalty is currently $368,136 per violation with the maximum criminal penalty of $1,000,000. If the BIS has reason to believe a violation has occurred, then BIS will inform the alleged violator with a written notice of the intent to impose a penalty. Alleged violators will then have 30 days to respond in writing and provide additional information to contest the penalty.
For importers of CVs, VCS, or ADS planning and supply chain due diligence will be critical in adapting to this new final rule.