Importers Remain Uncertain Whether Tariff Increase Will Affect Used and Classic Vehicles

      Nissan

      The tariffs imposed by the United States, which are anticipated to increase the cost of numerous new foreign-built vehicles, may also have repercussions for used models. Companies that focus on importing classic cars from overseas are uncertain about how the 25% tariff set to take effect on April 3 will impact their operations.

      "I have Porsches, BMWs, and a Ferrari arriving. Plus, more! It could cost me around $200,000," stated Gary Duncan, the owner of Duncan Imports in Virginia, to Automotive News. He imports thousands of vehicles from Europe and Japan annually, benefiting from the 25-year rule, and expressed his uncertainty about whether the new 25% tariff announced by the White House will apply to these vehicles.

      For perspective, the existing tariff on most imported cars is 2.5% (trucks are an exception due to the Chicken Tax). This equates to a $250 tariff on a car valued at $10,000. Imposing a 25% tax on the same car would result in a $2,500 cost for the importer. This increased cost could deter certain buyers, whether they intend to import vehicles for personal use or for resale, raising questions about the status of cars already in transit. Since shipping a car from abroad can take about a month, many importers may face unexpectedly high expenses. Some manufacturers have indicated they are willing to absorb part of the tariffs to maintain sales levels, but importers have no other parties to shift this burden onto.

      U.S. Customs and Border Protection informed Automotive News that, as of April 1, there was no information available on whether imported classic cars and restoration parts would face the same tax as new vehicles. The agency will provide an update when more details are received from the White House. Nevertheless, some dealers are already sounding alarms. California's Toprank International Vehicle Importers, which specializes in Japanese Domestic Market cars, alerted its customers about a "significant tariff increase on imported vehicles."

      What insights does Toprank have that others in the industry seem to lack? "I can tell you that, according to our customs broker, as of today, we expect a 27.5% tariff on all cars and a 50% tariff on all trucks, regardless of age,” a spokesperson for the dealership told Automotive News. However, several other companies involved in imports reported to the publication that they remain in uncertainty.

      Exempting used cars from the 25% tariff could create a ripple effect beyond the collector-car market. Consider if you're looking to purchase a new Mazda MX-5 Miata: since the roadster is manufactured in Japan, Mazda will incur a 25% tariff on every model it imports starting April 3. However, what’s preventing you from buying one new through an importer in Vancouver, Canada, and then quickly bringing it across the border as a used vehicle to avoid the tax? Could this lead to a resurgence of a gray market reminiscent of the one that was banned in the late 1980s?

      We have contacted U.S. Customs and will update this story with any new information.

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