Request for Consultations – U.S. Section 232 import duties on automobiles and automobile parts

April 3, 2025

Mr. Jamieson Greer
United States Trade Representative
600 17th St NW
Washington, D.C. 20006
United States of America

Dear Ambassador Greer:

The Government of Canada hereby requests consultations with the Government of the United States under the agreement between Canada and the United States dated November 30, 2018, concerning the imposition of measures by the United States pursuant to Section 232 of the Trade Expansion Act of 1962, as amended, on passenger vehicles, light trucks, and auto parts (the Agreement).^{Footnote 1} Specifically, the Agreement states, in part:

“[…] if the United States imposes a measure pursuant to section 232 of the Trade Expansion Act of 1962, as amended, with respect passenger vehicles classified under subheadings 8703.21 through 8703.09, light trucks classified under subheadings 8704.21 and 8704.31, or any auto parts within the scope of any such measure, the United States shall exclude from the measure:

1. 2,600,000 passenger vehicles imported from Canada on an annual basis;
2. light trucks imported from Canada; and
3. such quantity of auto parts amounting to 32.4 billion U.S. dollars in declared customs value on an annual basis.”

The Agreement was reached through an exchange of letters between Canada and the United States in connection with the negotiation of the Canada‑United States‑Mexico Agreement (CUSMA or USMCA). The dispute settlement procedures of Chapter 31 (Dispute Settlement) of the USMCA are incorporated and made part of the Agreement mutatis mutandis.

Canada requests consultations pursuant to Article 31.4 (Consultations) of the USMCA, as incorporated and made part of the Agreement, mutatis mutandis.

This request for consultations concerns measures adopted by the United States pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232) that impose a 25% tariff on automobiles, effective April 3, 2025, and a 25% tariff on automobile parts, effective on a date to be specified in the Federal Register but not later than May 3, 2025. These tariffs are in addition to any other duties, fees, exactions and charges imposed by the United States.

The legal instruments through which the United States imposes and administers the tariffs, operating separately or in combination, include the following measures:

• Section 232;^{Footnote 2}
• Section 301 of Title 3, United States Code;^{Footnote 3}
• Section 604 of the Trade Act of 1974;^{Footnote 4}
• S. Department of Commerce Report on the Effect of Imports of Automobiles and Automobile Parts on the National Security, dated February 17, 2019;^{Footnote 5}
• Presidential Proclamation No. 9888, dated May 17, 2019;^{Footnote 6} and
• Presidential Proclamation No. 10908, dated March 26, 2025.^{Footnote 7}

as well as any amendments, replacements, renewals, extensions, implementing measures, exemptions, or other related measures or instruments thereto, including any subsequent measures that alter the rate or scope of the tariffs.

In particular:

• Section 1 of Presidential Proclamation No. 10908 provides in part that “all imports of articles specified in Annex I to this proclamation or in any subsequent annex to this proclamation, as set out in a subsequent notice in the Federal Register, shall be subject to a 25 percent tariff […] on April 3, 2025, for automobiles, and on the date specified in the Federal Register for automobile parts, but no later than May 3, 2025”;
• Section 2 of Presidential Proclamation No. 10908 provides in part that “[f]or automobiles that qualify for preferential tariff treatment under the USMCA […] the Secretary may approve imports of such automobiles to be eligible to apply the ad valorem tariff of 25 percent […] exclusively to the value of the non‑U.S. content of the automobile”;
• Section 3 of Presidential Proclamation No. 10908 provides in part that “[i]f U.S. Customs and Border Protection (CBP) determines that the declared value of non‑U.S. content of an automobile […] is inaccurate due to an overstatement of U.S. content, the 25 percent tariff shall apply to the full value of the automobile, regardless of the actual U.S. content of the automobile. In addition, the 25 percent tariff shall be applied retroactively (from April 3, 2025, to the date of the inaccurate overstatement) and prospectively (from the date of the inaccurate overstatement to the date the importer corrects the overstatement, as verified by CBP) to the full value of all automobiles of the same model imported by the same importer”;
• Section 4 of Presidential Proclamation No. 10908 provides in part that “[t]he ad valorem tariff of 25 percent […] shall not apply to automobile parts that qualify for preferential treatment under the USMCA until such time as the Secretary, in consultation with CBP, 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”; and
• Section 7 of Presidential Proclamation No. 10908 provides in part that “[w]ithin 90 days of the date of this proclamation, the Secretary shall establish a process for including additional automobile parts articles within the scope of the tariffs […]”.

The Government of Canada considers that the above measures appear to be inconsistent with the United States’ obligations under the Agreement. Specifically:

1. the United States has imposed a measure pursuant to Section 232 with respect to passenger vehicles classified under subheadings 8703.21 through 8703.09, light trucks classified under subheadings 8704.21 and 8704.31, and certain auto parts without excluding goods from Canada as required by the Agreement. In particular:
   1. the United States has not excluded from the measure 2,600,000 passenger vehicles imported from Canada on an annual basis;
   2. the United States has not excluded from the measure light trucks imported from Canada;
   3. the United States has not excluded from the measure auto parts amounting to 32.4 billion U.S. dollars in declared customs value on an annual basis.
2. the United States has denied or otherwise frustrated eligibility for USMCA preferential tariff treatment for originating goods covered by the Agreement; and
3. the United States has applied a customs duty in excess of the United States’ Most‑Favoured‑Nation applied rate in effect on August 1, 2018, for non‑originating goods covered by the Agreement.

The Government of Canada reserves the right to address additional measures, as well as any additional factual and legal claims, in the course of consultations and in any future request for panel establishment.

The Government of Canada looks forward to receiving the response of the Government of the United States to this request, and to determining a mutually convenient date and place for the consultations.

Sincerely,

The Honourable Dominic LeBlanc, P.C., K.C., M.P.
Minister of International Trade and Intergovernmental Affairs and
President of the King’s Privy Council for Canada