Trump gave automakers a tariff break. It’s causing more confusion.

The problem is industry executives are puzzled over how to collect it. And that is in large part because it hinges on a simple yet loosely defined phrase they are struggling to interpret: “U.S. content."

When President Trump enacted the 25% tariff on all vehicle imports, he gave automakers some relief: They would be allowed to pay a lower tariff based on the percentage of U.S.-produced parts and materials used in a foreign-built vehicle.

The White House, however, has yet to provide many details on what exactly constitutes “U.S. content" or how it might be determined, for now leaving it up to the companies to figure it out on their own. Meanwhile, they have been left to pay the full tariff.

“We’re all waiting to better understand how this is supposed to be done," said Jennifer Safavian, president and chief executive of Autos Drive America, an industry group representing foreign-based automakers. “It’s not really been clear to us."

On Monday, Trump said he was considering some short-term tariff exemptions for car companies looking to relocate parts production to the U.S. from Canada and Mexico. He didn’t offer further specifics, only saying “they need a little bit of time because they’re going to make them here." New tariffs specifically targeting auto parts go into effect May 3.

The lack of clarity on the U.S.-content provision has triggered frustration and confusion across the auto industry, which imports about 7.5 million vehicles into the U.S. each year. Automakers will need to trace the origin of a lot of components: Safavian noted that each vehicle typically has 20,000-30,000 parts.

On the line are billions of dollars in potential savings for General Motors, Toyota Motor and other auto manufacturers that are now paying the tariff on foreign-built vehicles, including those made in Mexico and Canada. The 90-day pause on reciprocal tariffs announced last week doesn’t apply to automotive goods.

Company executives say the U.S. content requirements are critical for shaping longer-term decisions, such as whether to raise prices or reroute production. A study published Thursday by the Center for Automotive Research, an Ann Arbor, Mich.-based nonprofit, said the auto-import tariffs could increase costs for automakers by more than $100 billion.

Misinterpreting the rules carries some risk: The Trump administration has warned that any company found to have provided inaccurate information on their U.S. content levels could be subject to retroactive tariffs.

“The carve-out for U.S. content was a bright spot in the [tariff] order," said Mark Tallo, an attorney with Sandler, Travis & Rosenberg, who is advising vehicle manufacturers on compliance with the new tariff. But he added “the particular rules as to how this will be implemented are unknown."

A White House spokesman said the Commerce Department was working on a process for automakers to seek approval and begin taking advantage of the U.S. content deduction. The administration is aiming to get the process in place as soon as possible, the spokesman said, but no timeline was available.

As of now, U.S. content is only vaguely described as the value of a car attributable to parts “wholly obtained, produced entirely or substantially transformed" in the country. Before a vehicle can be considered for a deduction, it must also meet the requirements of the current free-trade pact in North America, called the U.S.-Mexico-Canada Agreement, or USMCA.

For such a complex industry with manufacturing operations and supply chains that span borders, how the U.S. content definition is worded can leave much up to interpretation, analysts and industry groups say. There are many parts that cross the border multiple times as they are built into larger components and before they are installed into a finished vehicle.

Some car companies are more exposed than others to the tariffs, but nearly all brands import at least some models for sale in the U.S.

GM and Ram make their highly profitable pickup trucks in Mexico, while Toyota builds its popular RAV4 sport-utility vehicle in Canada.

The Chrysler brand sells only two models, and both are built in Windsor, Canada, across the river from Detroit. In response to the import tariffs, Chrysler parent Stellantis said in early April that it would put that factory on pause for two weeks because of the tariffs.

VW has also said it plans to add an “import fee" to the sticker price of vehicles affected by the new import duties. With only one factory in the U.S., the German automaker imports many of its models, including from its factory in Puebla, Mexico.

“We don’t have clear guidance from the government on how to calculate U.S. content," a VW spokesman said.

The potential savings generated by the deduction could be significant, analysts and executives say.

Take Toyota’s RAV4. The Canadian-built SUV has a starting price tag of about $30,000, meaning a 25% tariff would cost the company about $7,500 to import it to the U.S.

With about 60% of its content made in the U.S., a deduction would cut the tariff rate by almost half to about $3,000 a vehicle.

Spread over about 290,000 vehicles—the number of RAV4s Toyota imported last year to the U.S. from Canada—that could be a saving of roughly $1.3 billion a year.

Automakers including Toyota could save billions in tariff-related costs if they can document the amount of U.S. content in the vehicles they sell.

The scramble to figure out what vehicles have U.S. content has also triggered much back and forth between the car companies and their parts suppliers, many of which are also trying to figure out how to navigate the new tariff rules.

While industry manufacturers typically know what is made in North America—information that is essential for meeting free-trade requirements—the task of trying to parse what is specifically U.S.-built is more of a challenge, said Safavian, of the auto-industry lobbying group.

“Automakers don’t necessarily have insight into every component and part that goes into a vehicle, so they would need to get that information from the suppliers," she said.

“There’s not just one supplier, there’s many layers of suppliers."

Write to Ryan Felton at ryan.felton@wsj.com