In a major policy shift, U.S. Commerce Secretary Howard Lutnick announced that vehicles with 85% or more domestic content will be fully exempt from new tariffs on automobiles.
That’s a steep threshold, and as of today, there’s only one automaker that qualifies for the exemption: Tesla.
Tesla Alone Qualifies for Full Tariff Exemption
Here are the top 10 vehicles according to the most recent data on automobiles ranked by domestic content percentage:
| Rank | Makes | Model | Total Domestic Content |
|---|---|---|---|
| 1 | Tesla | Model 3 Performance | 87.5% |
| 2 (tied) | Tesla | Model Y Long Range | 85.0% |
| 2 (tied) | Tesla | Model Y | 85.0% |
| 3 | Tesla | Cybertruck | 82.5% |
| 4 (tied) | Ford | Mustang GT AT | 80.0% |
| 4 (tied) | Ford | Mustang GT 5.0L | 80.0% |
| 4 (tied) | Ford | Mustang GT Coupe Premium | 80.0% |
| 4 (tied) | Tesla | Model S | 80.0% |
| 4 (tied) | Tesla | Model X | 80.0% |
| 5 | Honda | Passport AWD | 76.5% |
According to the 2024 data from the Kogod School of Business at American University, there are only three vehicles that meet the exemption threshold under the new tariff policy. Those are one cut of the Tesla Model 3 and two cuts of the Tesla Model Y with domestic content above the 85% mark.
Where Automotive Tariffs Stand Today
The base tariff rate for all imports is set at 10%, but the standard for many automakers and automotive part suppliers will be a stiff 25%, unless they qualify for a rebate program that will be available for the next two years only.
Clearing that new 85% threshold is a massive win for any automaker, simplifying their supply chain, regulatory requirements, and most importantly, pricing.
Is This Favoritism?
You probably can’t tell, but I have an eyebrow raised over here, it’s been stuck that way since these exemptions were announced. While domestic content rules sound neutral on paper, the real-world effect of this policy is to carve out an exemption that only Tesla benefits from today.
Watching Elon Musk hang out in the White House for weeks on end was initially puzzling. It certainly did nothing good for Tesla’s revenue numbers. It absolutely does make sense when you look at the newly emerging regulatory order, though.
Even for models that come close to that oddly specific 85% mark, like the Ford Mustang and the built-in-Alabama Honda Passport, a few percentage points make all the difference between scrambling to adapt to a steep tariff and skating by untouched.
Stay tuned, these changes are slated to be packaged in an executive order to be signed this evening. We may have further updates based on the specific verbiage in the order.
Update: The White House released a “Fact Sheet” tonight that broadly confirms the tariff rules change that we reported on above. That promised Executive Order arrived, but the impact is easier to understand from the Fact Sheet.
Second update: A few folks on social media, notably on Hacker News, have asked about the accuracy of the source data up above. If that’s you, welcome!
Click here to read a sort-of-dry but very quantitative explanation of the data from American University’s study.
The source data above is aggregated by the Kogod School of Business at American University, in their long-running “Made in America Auto Index.” Specifically, we are looking at the “Key Data Points,” which list domestic content percentages of vehicles, and not their more qualitative “Auto Index Ranking” which incorporates a number of other factors.
In their methodology section, they talk through their measurement methodology in full. They explain that the percentage of domestic content is reported either to the NHTSA or collected manually by seeing cars at auto dealerships and reading the mandatory “Monroney Sticker” posted in the window. If the data in this study does not match the data from the NHTSA, that is to be expected. That is likely because this study’s data is taken from multiple official sources, including directly from dealership stickers.
