The price shock in just one month for just two countries will become impossible to ignore for suppliers, dealers and consumers, says industry analyst
East Lansing, Mich.—North American automakers faced a sharp increase in tariff duties on imported vehicles in July. New analysis by Anderson Economic Group (AEG) reveals more than $1.1 billion in tariffs was imposed on assembled vehicles from Canada and Mexico, and another $276 million was levied on auto parts, in the month of July 2025.
In total, $1.389 billion in tariff duties was imposed on cars and auto parts from both countries.
These costs were imposed on North American automakers and their suppliers. Automakers assembling vehicles in the United States include General Motors, Ford, Stellantis, Toyota, Honda, Hyundai, Kia, Rivian, Tesla, as well as Mercedes-Benz, Volkswagen and BMW.
Many of the vehicles assembled in the United States have substantial parts content from Canada and Mexico.
| Duties Calculated, July 2025 | Detail |
| $801,968,758 | Mexico, cars |
| $204,530,597 | Mexico, parts |
| $311,442,117 | Canada, cars |
| $71,526,157 | Canada, cars |
| $1,389,197,629 | Total |
Surge in Duties Collected from North American Vehicles
AEG reviewed the September data release by the U.S. Census Bureau and Bureau of Economic Analysis, which includes U.S. international trade statistics through July 2025. The analysis covered auto parts and assembled vehicles from Canada, Mexico, Germany, and Japan.
Up until June 2025, duties on Canadian vehicles remained low, as those imports were largely reported as non-dutiable. In July, however, the amount of calculated tariffs for Canadian vehicles jumped to $311 million. That represents roughly 26% of the total dutiable value. In the same month, $72 million was levied on auto parts from Canada, representing 36% of the dutiable value.
For Mexico, $802 million, or 24% of the total dutiable value, was levied on vehicles in July. Mexican auto parts faced a total of $205 million in tariff, or about 30% of the total dutiable value. However, unlike Canada, Mexico saw a spike in the amount of tariffs collected from vehicles and auto parts earlier in April, a pattern similar to that of German and Japanese auto imports.
Big Drop in Tariff-Exempt Vehicles from Canada and Mexico in July
Before July 2025, almost all vehicles and a large share of auto parts from Canada and Mexico were reported as exempt from tariffs. For many of those months, nearly 100% of Canadian automobiles and 80% of Canadian auto parts were not subject to duty. Mexican vehicles and parts were also insulated from tariffs to a lesser extent, with 60-70% of auto parts and 80% of vehicles qualified for tariff-free treatment. This sharply contrasted with vehicles and parts from Germany and Japan, which received very little exemptions.
This changed dramatically in July. Within one month, the share of exempt Canadian vehicles dropped from 99% to 36%. Mexican vehicles also saw further decline in exemptions, with the share of tariff-free vehicles dropping to just 21% in July from 91% in March.
Benefits of USMCA; Contrast with Germany and Japan
North American automakers previously relied upon the USMCA trade agreement (and before that, NAFTA) which exempted a very large share of the voluminous trade in automobiles and parts within North America from imports.
With the new tariff policies under the Trump Administration, including the executive orders and proclamations in late March and April, this changed dramatically. The data suggest that US Customs allowed automakers to claim exemptions for most vehicles under the USMCA through April, May, and some or all of June. AEG’s research notes that this is one allowable interpretation of the proclamations and executive orders issued in March and April.
Germany and Japan did not benefit from the same exemption. Nearly all vehicles and parts from those two countries were subject to the full tariff throughout the entire period. AEG does not observe any sharp changes in the dutiable value or the share of imports exempt from tariffs for both countries in July 2025.
What It Means for North American Automakers
The sharp drop in the share of vehicles exempt from tariffs marks a turning point for North American automakers, who benefited from temporary allowances in the first half of 2025. With the end of the allowances that prevailed through May and into June of this year, automakers and suppliers are now facing the tariff-related cost increases that AEG and others noted were coming as early as January of this year.
“Tariffs hit North American automakers hard in July,” said Patrick L. Anderson, Principal and CEO of Anderson Economic Group. “The automakers made extensive use of temporary allowances that effectively allowed an exemption for the majority of both parts and vehicles through June. That changed in July for assembled vehicles, and we can expect that these costs will become embedded into the prices consumers are paying in the very near future.”
He added, “Starting in January of this year, we stated that tariffs at this level would hit suppliers, dealers, and consumers this year. With over a billion dollars in tariff costs in just one month and for just two countries, the price shock will become impossible to ignore.”
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