February 23, 2026 - Auto Industry Still on the Hook For Tariffs

This is the Telemetry Transportation Daily for February 23, 2026, and I'm Sam Abuelsamid, Vice President of Market Research for Telemetry.  

Late last week, the U.S. Supreme Court ruled that President Trump did not have the authority to impose import tariffs under the 1977 International Emergency Economic Powers Act. Trump had used this law as justification to declare wide-ranging tariffs on almost all imported products and materials coming into the U.S. over the past year. While this gave some momentary relief to businesses, it didn't last long and had almost no impact on the auto industry. By the end of the same day, Trump signed an executive order imposing global tariffs of 10% which were raised to 15% a day later. He claimed authority for these tariffs under several trade laws from 1962, 1974, and 1930. 

The auto industry has a uniquely complex supply chain with many of the thousands of parts and the raw materials that comprise a modern vehicle crossing multiple borders, multiple times on the way to being a completed vehicle, even if it is assembled in the U.S. The 25% tariffs on vehicles and parts that don't comply with the USMCA trade deal fall under the 1962 Trade Expansion Act and are unaffected by the Supreme Court ruling. The same is true for the 50% tariffs on steel and aluminum from Canada. Thus, automakers operating in the U.S. are seeing almost no relief from the court ruling. 

In fact, the situation may soon get worse. Negotiations are starting on renewing or revising the USMCA that Trump negotiated during his first term, and there is a distinct possibility that the North American trade pact may be scrapped entirely. Even if the USMCA is extended, the US International Trade Commission (ITC) has begun examining the rules of origin for parts and materials that cross the two borders. Currently, duty-free movement requires that parts and vehicles must have 75% North American content, with 40% of core parts from the U.S. or Canada. The administration's ultimate goal is near-zero imports, so if USMCA survives, it may have significantly higher U.S. requirements that may simply not be practical. 

The bottom line for consumers is that vehicle prices aren't expected to decline anytime in the near future unless automakers start introducing cheaper models with significantly less content. 

Thanks for listening.