How Do Tariffs Affect Car Exports from the USA? 

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:

  1. HTS Classification
    Assign the correct Harmonized Tariff Schedule (HTS) code—8703 for passenger cars, 8704 for light trucks—to avoid misclassification penalties.
  2. 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.
  3. U.S. Surcharge Check
    Confirm whether Section 232 national-security duties or Section 301 retaliatory tariffs apply at the time of export.
  4. Customs Valuation
    Calculate duties on a CIF (Cost + Insurance + Freight) basis and include any “assist” values such as tooling or warranty parts.
  5. Local Consumption Taxes
    Factor in destination VAT or GST—typically 19 – 25 percent—assessed on (CIF + import duty).
StepKey Action
HTS ClassificationSelect precise vehicle code
Rate DeterminationCompare MFN vs. preferential FTA rates
U.S. Surcharge CheckApply Section 232/301 duties if active
Customs ValuationUse CIF plus assists for duty calculation
Local Tax CalculationAdd 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.

DestinationU.S. Export DutyImport Duty RateTypical Local Taxes
European Union0 percent10 percent MFNVAT 19 – 25 percent
Canada0 percent6.1 percent MFNGST 5 percent; PST varies
China0 percent40 percent (15 % + 25 % surcharge)VAT 13 percent
Mexico (USMCA)0 percent0 percent with NA‐origin certificationVAT 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 TypeTypical Rate
Import Duty0 % – 40 %
VAT/GST19 % – 25 %
Non-Tariff FeesVaries by market
Total Added Cost20 % – 30 %

Strategies to Mitigate Export Tariffs

  1. Leverage Free-Trade Agreements
    Qualify for zero-duty under USMCA or GSP by certifying origin.
  2. Use Foreign-Trade Zones
    Defer or eliminate U.S. duties by admitting vehicles into FTZs prior to re-export.
  3. Claim Duty Drawback
    Reclaim up to 99 percent of duties on vehicles re-exported or scrapped.
  4. Obtain Binding Tariff Rulings
    Secure pre-shipment classification rulings from CBP to lock in favorable HTS codes.
  5. Submit Advanced Ruling Requests
    Get clarity on duty treatment for specialized vehicle configurations.
  6. Utilize Bonded Warehouses
    Store vehicles duty-free until the final destination is confirmed.
  7. 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.

DocumentPurpose
AES Filing (>$2 500)Electronically report exports over $2 500 to CBP
Commercial InvoiceItemizes value, quantity, and transaction terms
Bill of LadingCarrier contract and cargo description
Export LicenseRequired for EAR/ITAR-controlled items
Certificate of OriginVerifies FTA eligibility
Customs Broker POAAuthorizes 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.

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.

FeatureDescription
Inventory VarietyWide range of cars, trucks, and SUVs available
Competitive PricingBelow-market pricing allows for higher profit margins
Vehicle History ReportsDetailed history reports for every vehicle
Online BiddingConvenient online bidding options for dealers
Financing OptionsFinancing 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.

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