In 2023, the United States exported $179 billion worth of motor vehicles and parts, underscoring its significant role in the global automotive market.
However, exporters often encounter substantial challenges due to tariffs imposed by importing countries. These tariffs, along with local taxes, can increase the landed cost of vehicles by 20% to 30% or more, affecting competitiveness and profitability.
This guide delves into the intricacies of export and import tariffs, highlighting the markets with the highest rates and offering proven strategies to mitigate these charges.
By understanding the tariff landscape, exporters can better navigate international trade complexities and optimize their operations.
Key Takeaways
- Tariffs and local taxes can increase a vehicle’s landed cost by 20% to 30%, directly impacting export profitability.
- Free-trade agreements like USMCA and GSP allow exporters to eliminate or reduce duties through proper certification.
- Foreign-Trade Zones and bonded warehouses offer ways to defer or eliminate duty obligations on exported vehicles.
- Accurate HTS classification and customs valuation are critical to avoid misclassification penalties and ensure compliance.
- Non-tariff barriers like emissions testing and documentation delays can further raise costs and extend clearance times.
- Auctions such as Twin Cities Auctions simplify export paperwork and offer competitive pricing with transparent bidding processes.
How Export Tariffs Work
Exporters must combine U.S. export procedures with foreign import duties. Follow these steps:
- HTS Classification
Assign the correct Harmonized Tariff Schedule (HTS) code—8703 for passenger cars, 8704 for light trucks—to avoid misclassification penalties. - MFN vs. Preferential Rates
Determine if your shipment qualifies for zero-duty under a free-trade agreement (e.g., USMCA, GSP) or pays the standard Most-Favored-Nation (MFN) rate. - U.S. Surcharge Check
Confirm whether Section 232 national-security duties or Section 301 retaliatory tariffs apply at the time of export. - Customs Valuation
Calculate duties on a CIF (Cost + Insurance + Freight) basis and include any “assist” values such as tooling or warranty parts. - Local Consumption Taxes
Factor in destination VAT or GST—typically 19 – 25 percent—assessed on (CIF + import duty).
| Step | Key Action |
| HTS Classification | Select precise vehicle code |
| Rate Determination | Compare MFN vs. preferential FTA rates |
| U.S. Surcharge Check | Apply Section 232/301 duties if active |
| Customs Valuation | Use CIF plus assists for duty calculation |
| Local Tax Calculation | Add destination VAT/GST on CIF + import duty |
Top Export Destinations and Import Duties
Standard MFN duty rates are shown below; many FTAs reduce these to zero.
| Destination | U.S. Export Duty | Import Duty Rate | Typical Local Taxes |
| European Union | 0 percent | 10 percent MFN | VAT 19 – 25 percent |
| Canada | 0 percent | 6.1 percent MFN | GST 5 percent; PST varies |
| China | 0 percent | 40 percent (15 % + 25 % surcharge) | VAT 13 percent |
| Mexico (USMCA) | 0 percent | 0 percent with NA‐origin certification | VAT 16 percent |
Non-tariff barriers such as emissions testing, homologation, and documentation requirements can further delay clearance and add cost.
Impact on Landed Cost
Import duties and local taxes typically increase your cost by 20 – 30 percent over FOB value.
| Charge Type | Typical Rate |
| Import Duty | 0 % – 40 % |
| VAT/GST | 19 % – 25 % |
| Non-Tariff Fees | Varies by market |
| Total Added Cost | 20 % – 30 % |
Strategies to Mitigate Export Tariffs
- Leverage Free-Trade Agreements
Qualify for zero-duty under USMCA or GSP by certifying origin. - Use Foreign-Trade Zones
Defer or eliminate U.S. duties by admitting vehicles into FTZs prior to re-export. - Claim Duty Drawback
Reclaim up to 99 percent of duties on vehicles re-exported or scrapped. - Obtain Binding Tariff Rulings
Secure pre-shipment classification rulings from CBP to lock in favorable HTS codes. - Submit Advanced Ruling Requests
Get clarity on duty treatment for specialized vehicle configurations. - Utilize Bonded Warehouses
Store vehicles duty-free until the final destination is confirmed. - Insure and Hedge Risk
Purchase trade-credit insurance covering duty exposure and lock in freight rates.
Compliance and Documentation Requirements
Accurate paperwork prevents costly customs delays.
| Document | Purpose |
| AES Filing (>$2 500) | Electronically report exports over $2 500 to CBP |
| Commercial Invoice | Itemizes value, quantity, and transaction terms |
| Bill of Lading | Carrier contract and cargo description |
| Export License | Required for EAR/ITAR-controlled items |
| Certificate of Origin | Verifies FTA eligibility |
| Customs Broker POA | Authorizes broker to act on exporter’s behalf |
Failing to file AES or missing certificates can incur penalties up to $10 000 per violation.
Why Auctions Are a Smart Choice for Car Purchases
Auctions can be an excellent source for late-model vehicles with clear chains of title and affordable pricing. Twin Cities Auctions, based in Minnesota, is one such reputable auction house that offers a wide range of vehicles at competitive prices.
Key Benefits of Buying from Auctions:
- Wide Selection: Auctions like Twin Cities Auctions offer a variety of vehicles, from low-budget cars to high-end models.
- Competitive Pricing: Auctions often offer vehicles at prices below retail value, enabling dealers to maximize their profit margins.
- Transparency: Auctions provide full vehicle history reports, so you know exactly what you’re buying.
- Convenient Bidding: Many auctions offer online bidding for your convenience, making it easier to source vehicles without being physically present.
Twin Cities Auctions: A Smart Vehicle Sourcing Choice
For those in the automotive industry, Twin Cities Auctions offers an excellent platform for sourcing quality vehicles at competitive prices.
Whether you are just starting or expanding your business, this auction house provides transparency, competitive pricing, and a broad selection.
| Feature | Description |
| Inventory Variety | Wide range of cars, trucks, and SUVs available |
| Competitive Pricing | Below-market pricing allows for higher profit margins |
| Vehicle History Reports | Detailed history reports for every vehicle |
| Online Bidding | Convenient online bidding options for dealers |
| Financing Options | Financing available to help with inventory purchases |
Conclusion
Export and import duties are an inevitable part of the auto export business, but strategic planning can protect your margins. Master HTS classification, leverage FTAs and FTZs, and pursue drawback claims. With precise compliance and transparent landed-cost forecasting—enhanced by auction-platform fee estimators—U.S. car exporters can thrive in global markets.
Find Your Next Ride Online at Twin Cities Auctions—No Dealer License Required
Searching for your next vehicle? Twin Cities Auctions offers an online, transparent car auction experience that’s accessible to everyone, no dealer license needed. Browse and bid on a diverse selection of quality vehicles from the comfort of your home.
Whether you’re a first-time buyer or an experienced trader, our clear, honest bidding process ensures you can make informed decisions in a supportive environment. Join our next online auction and discover how effortless and enjoyable finding your next car can be with Twin Cities Auctions!
Looking for more options? Explore our comprehensive list of all available car auctions across the United States. Your next deal might be just a click away!
FAQ
How are duties calculated on CKD kits?
Each component is classified under its HTS code; assembled kits often benefit from lower component duty rates.
Can I claim duty drawback?
Yes—file within three years of export to reclaim duties on re-exported or scrapped vehicles.
What export licenses are required?
Most passenger cars need no EAR/ITAR license; check for controlled parts or software.
How long can an export audit take?
Customs may audit classification and origin claims up to two years after shipment.
Do FTZs waive all duties?
FTZs defer duties until goods enter U.S. commerce; drawback can eliminate duties on re-exports.
Source Links
https://www.bea.gov/data/intl-trade-investment/exports/import-exports-services-and-goods
https://trade.ec.europa.eu/access-to-markets/en/barriers/details?barrier_id=14262
https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn25-15-eng.html
https://www.cbp.gov/trade/programs-administration/drawback
https://www.census.gov/foreign-trade/statistics/aes/index.html