The introduced U.S. automotive tariffs create potential challenges and risks for display panel supply chains

Since the Trump Administration's second term commenced, the U.S. government has enacted a series of tariff policies, including automotive tariffs. This has intensified pressure on the sector, which now faces higher tariffs, stricter audits regarding product origin, and expanding compliance requirements. While much attention is focused on complete vehicles, key components and materials, such as powertrains, batteries, ECUs, and semiconductors, automotive displays quietly suffer collateral damage in this geopolitical trade reshuffle.

Automotive display panel makers face indirect but growing risks

Historically, automotive display modules without integrated system-on-chips (SoCs) or embedded signal processing are often classified as standalone monitors under the Harmonized Tariff Schedule of the United States (HTSUS) heading 8528, which generally carries a 0% most-favored-nation (MFN) duty rate. In some Customs and Border Protection (CBP) rulings, when a module cannot receive or process video/ADP signals, it may instead fall under headings like 9013 (liquid crystal devices), which also typically benefit from low or zero MFN duty rates. In these configurations, such modules are usually not subject to Section 232 tariffs, and Section 301 tariffs only apply if they originate from China, typically at 7.5% (List 4A products).

Based on CBP guidance (e.g., Bulletin #64724565) emphasizing growing enforcement on system-level integration and functionality, if the automotive display module includes a SoC or other embedded signal processing capabilities, U.S. Customs may consider it a complete infotainment or computing system rather than a passive display. In such cases, classification may shift to headings like 8471 (automatic data processing machines) or other system categories, which fall under earlier Section 301 lists and are therefore subject to a higher 25% duty rate. This reclassification substantially increases tariff exposure, ranging from 7.5% if treated as a component to 25% if reclassified as a system, with the highest risk scenario applying particularly to products of Chinese origin.

While panel manufacturers themselves aren’t directly taxed, their customers, specifically OEMs and Tier 1 suppliers, are feeling the pressure of the automotive tariffs. Some are rerouting supplies through Southeast Asia or using NAFTA/USMCA-compliant modules. Others may implement customs strategies such as first-sale declarations and duty drawback programs. Still, none of these completely mitigates risks if critical Chinese components remain embedded. More importantly, regulators are tightening scrutiny on so-called origin-shifting practices. Displays assembled in Vietnam but still heavily dependent on Chinese glass or modules may no longer qualify for tariff exemptions, and in the worst case, could face combined duties approaching 40%. This reinforces the trend toward dual sourcing: one track anchored in China for cost efficiency, and another building a non-China supply chain for compliance insurance. Yet such diversification is not easy. Taiwan and Japan continue to wind down LCD fabs, and Korea has exited LCD altogether, leaving only OLED capacity that cannot yet absorb mainstream automotive demand. This shrinking non-China base means that, even as OEMs look to diversify, alternatives are limited, costlier, or insufficient in scale. China, therefore, remains the dominant supplier, holding both cost and capacity advantages—but also carrying the heaviest exposure to tariffs, compliance audits, and growing risks of IP litigation.

Reshoring panels to the U.S.? Still unlikely

The current U.S. trade policy operates under three pillars: reshoring advanced manufacturing, promoting U.S.-based production, and reinforcing national security. Despite political pressure, building a display fab factory in the U.S. remains commercially impractical. High costs, lack of ecosystem support, and global overcapacity continue to deter investment. Moreover, automotive displays—unlike electronic control units (ECUs) or battery cells—are passive components, viewed as low-priority from a national security lens. Based on these situations, it can be predicted that automotive display panels will not be subject to high tariffs unless they are reclassified as systems.

Conclusion

As the U.S. intensifies trade enforcement and automotive tariff measures under its renewed industrial policy, the automotive display sector finds itself in an increasingly precarious position. Although not at the center of national security or reshoring agendas, display panel makers face growing downstream impacts from shifting classifications, rising compliance burdens, and evolving sourcing strategies. In an environment where origin rules are tightening and global capacity is consolidating in China, the risks are no longer only about tariffs but also about structural dependence. To remain resilient, it is crucial to closely monitor regulatory changes, diversify supply chains, and reassess integration practices, because in this era of geopolitical uncertainty, even passive components can become strategically vulnerable. 

Want to learn more about the evolving landscape of automotive display technology? Check out this on-demand webinar, in which Stacy Wu, Senior Principal Analyst, explores the next chapter of automotive displays and HMI, the evolution of the automotive display ecosystem, and emerging display opportunities in the era of smart mobility. Watch now.