Commerce opens engine parts tariff offset process for US assemblers
Commerce issued procedures for domestic automobile engine and medium and heavy-duty vehicle engine manufacturers to claim import adjustment offsets on covered parts imports. Applications can be submitted starting July 29, 2026.
What this affects
| Chapter 99 | HTSUS subchapter III notes used for covered automobile and MHDV measures |
Codes are a starting point, not a classification. Confirm your own 10-digit HTS before you rely on a rate, using our HTS classification guide.
The update
This notice creates the Engine Offset Process for domestic manufacturers that assemble automobile engines or medium and heavy-duty vehicle engines in the United States. It lets approved manufacturers claim import adjustment offsets that can reduce certain tariff liability on covered automobile parts or MHDV parts under Proclamations 10908 and 10984.
The notice says the offset amount is equal to 3.75% of the aggregate value of qualifying engines assembled in the United States by the manufacturer, as determined annually by Commerce. The process includes application, documentation, certification, importer of record listing, and CBP coordination requirements. Offsets may be used only by approved importers tied to the approved manufacturer, only on covered tariff liability, and they may not be traded, sold, or transferred.
Commerce excludes certain limited production operations from offset calculations. In the first two years, only engine production using two or more U.S. originating core engine components is eligible, and from year three onward the threshold rises to four or more. Applications from domestic manufacturers of automobile engines and MHDV engines can be submitted starting July 29, 2026.
Impact
This notice does not impose a new tariff, but it sets the process for reducing certain Section 232 parts duty liability through approved offsets. For eligible engine manufacturers and their authorized importers, the program can change landed cost and cash flow, but it also adds documentation, valuation, origin, and audit exposure.
What to watch
The notice is procedural and applies only to approved manufacturers and their approved importers of record. Eligibility depends on detailed production, value, and U.S. originating core component rules, and offsets cannot exceed covered tariff liability or be transferred.
How to prepare
- 1Map affected entries
Identify covered automobile parts and MHDV parts entries tied to approved importers of record.
- 2Verify engine eligibility
Check whether production uses the required number of U.S. originating core engine components.
- 3Review valuation method
Confirm the engine value methodology used for forecasts and prior year true-ups.
- 4Align importer records
Make sure importer of record numbers and offset allocations match Commerce approvals.
- 5Prepare audit support
Retain production, machining, origin, and tariff liability documentation for Commerce and CBP review.
Sources
- Procedures To Administer Import Adjustment Offset Amounts for Certain Imports of Automobile and Medium- and Heavy-Duty Vehicle Parts for Automobile and Medium- and Heavy-Duty Vehicle Engine Manufacturers · Federal Register · July 29, 2026
We summarize published reporting and official notices. Always confirm rates and dates against the Federal Register or your customs broker before acting on them.