Perc Pineda, PhD
Chief Economist, PLASTICS
July 1, 2025
Auto Tariffs and the Plastics Industry: Turning Trade Policy into Opportunity
Beginning April 3, 2025, the Trump administration imposed a 25% tariff on imported automobiles and light trucks under Section 232 of the Trade Expansion Act of 1962. This policy was later expanded to include certain imported automobile parts, which became subject to the same tariff that began on May 3.
While vehicles and parts that qualify under the USMCA continue to benefit from preferential tariffs, those that do not are now subject to 25% duties. Relief may soon be available, pending guidance from the U.S. Department of Commerce, allowing duties to apply only to the non-U.S.-origin content of vehicles.
The implications of these tariffs go beyond automakers—they ripple through supply chains and present an opportunity for U.S. plastics processors.
Auto Investment Accelerates on Tariff Signals
Tariffs are already influencing production decisions. On June 10, GM announced a $4 billion investment in its U.S. manufacturing plants to increase domestic output of gas and electric vehicles. Stellantis plans to reopen its Belvidere, Illinois, plant as part of a $5 billion strategy to mitigate tariff exposure. Hyundai is expanding capacity in Georgia and Alabama to 500,000 and 356,100 vehicles per year, respectively.
Other automakers are making similar moves: Volvo is ramping up U.S. production of the EX90 SUV; Honda plans to shift Civic Hybrid production to Indiana by 2028; and Audi is evaluating a $4.6 billion U.S. plant to avoid import duties.
These developments point to a future where more parts are made—and sourced—domestically.
Where Plastics Fit into the Tariff Equation
Auto parts tariffs now span eight chapters of the U.S. Harmonized Tariff Schedule (HTS): 40 (rubber), 70 (glass), 83 (misc. articles of base metal), 84 (machinery), 85 (electronics), 87 (vehicles and parts), 90 (instruments), and 94 (cushions/furniture). Chapter 39—plastics and articles thereof—is not among them. But that doesn’t mean plastics are out of the picture.
In fact, over a third of the approximately 30,000 automobile and light truck parts are made from plastics. As importers reassess sourcing strategies, U.S. plastics processors could fill gaps left by tariffed imports—especially in parts that blend plastic with other materials.
Now is the time for the plastics industry to take a “glass-half-full” view. Tariff-driven reshoring could increase demand for injection molding, tooling, resins, additives, and machinery.
Chapter 87: Case Studies in Substitution Potential
Looking at three specific auto parts under Chapter 87 reveals tangible openings:
Even if OEMs rely on in-house molding, demand for upstream products and services in the plastics supply chain is likely to rise.
Policy Outlook and Industry Implications
The long-term impact of tariffs depends on how trade negotiations unfold. For instance, under the U.S.–U.K. Trade and Technology Agreement, which took effect June 30, 2025, the U.S. agreed to reduce tariffs on up to 100,000 U.K.-made vehicles from 27.5% to 10%.
Whether this trend continues or reverses will influence future plastics demand. For now, the message is clear: when trade rules change, so do sourcing strategies. The plastics industry—especially processors—should lean into this moment to grow market share and strengthen domestic production.
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