Last week, the US announced the imposition of tariffs on global imports, leaving the automotive industry facing another challenge. This follows other industry-wide issues, namely falling demand for foreign vehicles in China and stifled growth and regulatory pressures in European markets.
“The rollout of these tariffs is yet another problem for the industry to navigate. The US is the world's second-largest vehicle market, and it will now be more difficult than ever for the vast majority of non-Chinese automakers around the world to trade,” JATO Dynamics global analyst, Felipe Munoz, said.
Data from JATO Dynamics reveals that 16.1 million new light vehicles were sold in the US in 2024. Around 6.3 million were largely imported from Mexico, Canada, the European Union, the UK, Japan, and Korea – all of which will face a 25 per cent tariff when exporting vehicles to the US. In addition, from May 3rd, 2025, these measures will be broadened to include automotive parts made outside of the country.
Detroit’s’Big Three’ left vulnerable
While the 25 per cent tariff has been applied broadly, carmakers will feel its impact in a variety of different ways. For example, in 2024, Detroit’s ‘Big Three’ – General Motors, Ford, and Stellantis – sold approximately 1.85 million imported light vehicles in the US, accounting for 13 per cent of their combined global sales.
In comparison, Toyota, Honda, and Nissan – the three largest Japanese brands – sold 17.9 million units globally last year. Of this total, 1.53 million units were imported and sold within the US market, equating to nine per cent. For Germany’s Volkswagen Group, BMW Group, and Mercedes Benz, US demand for their imported cars accounted for seven per cent of their combined global total.
While the new trade policy is intended to boost domestic carmakers, they too will be impacted negatively. With a smaller global presence than some of their Japanese and European counterparts, US manufacturers rely heavily on domestic sales, meaning that tariffs on cars imported largely from Mexico, Canada, and Korea will be felt keenly.
Other brands will suffer
Few will benefit from the imposed tariffs, but some brands will suffer more than others. For example, Mazda, Subaru, and General Motors are most reliant on imports into the US. Mazda sold 1.28 million new cars globally in 2024 – 343,000 of these were vehicles imported and sold in the US. Meanwhile, the US accounted for 71 per cent of Subaru’s total car sales in 2024. While a large portion of these vehicles was produced at its factory in Indiana, imports into the US still made up 26 per cent of the brand’s total volume globally.
“The US is a vital market to 14 of the 18 non-Chinese global carmakers. For the likes of Volkswagen, the US contributes a relatively small amount of the brand’s total revenue, but it will seek to hold a presence to retain its position as a global brand. Alongside Volkswagen, it is likely that Volvo, Hyundai-Kia, Mercedes, BMW, Stellantis, Toyota, Nissan, Subaru, and General Motors will need to increase their production footprint in the US in the near future. The US is a market that they can’t leave,” Munoz said.