The True Victims of Trump's Tariffs Could Be American Automakers Themselves | Carscoops

      New tariffs on imported vehicles are intended to create challenges for foreign brands, but the initial impact may actually be felt more by American manufacturers.

      **6 hours ago**

      **By Andreas Tsaousis**

      Last year, Detroit’s Big Three automakers sold 1.85 million imported vehicles in the U.S.

      These tariffs could be more detrimental to U.S. brands than to their foreign competitors due to their reliance on imports.

      In response, automakers might relocate production to the U.S. to mitigate escalating costs and maintain profit margins.

      President Trump’s recent tariffs on imported cars aim to shield domestic manufacturers and preserve American jobs. However, the situation in the automotive sector is complex, and the tariffs that took effect on April 2 could inadvertently harm the very companies they aim to support more than their international counterparts.

      The primary reason is that American brands do not produce all their models domestically. In fact, last year, GM, Ford, and Stellantis (the Big Three) sold around 1.85 million imported light vehicles in the U.S., accounting for 13% of their overall global sales.

      In comparison, the three largest Japanese automakers—Toyota, Honda, and Nissan—sold 1.53 million units in the U.S., representing only 9% of their global sales. For the German manufacturers, imported vehicles from VW Group, BMW Group, and Mercedes-Benz constituted 7% of their total sales, based on a JATO Dynamics report.

      This indicates that domestic automakers rely more heavily on importing vehicles from their plants in regions like Canada and Mexico compared to their main foreign competitors. Furthermore, the report highlights that the Big Three are significantly more dependent on the U.S. market than European and Japanese brands, which have broader international reach.

      General Motors is likely to be the most affected by Trump’s tariffs, ranking just behind Hyundai-Kia and Toyota in U.S. vehicle imports in 2024. Imported models comprised 18% of its global sales, the largest percentage among the world’s top five automakers.

      Compounding the issue is GM's primary focus on North and South America and China for vehicle deliveries, while it has limited presence in Europe and elsewhere. The increasing shift of Chinese consumers towards domestic brands adds pressure, making the U.S. its main market—yet the new tariffs pose a significant threat to its operations.

      Felipe Munoz, Global Analyst at JATO Dynamics, noted, “The implementation of these tariffs presents another challenge for the industry. The U.S. is the second-largest vehicle market globally, and it has become increasingly difficult for most non-Chinese automakers worldwide to operate.”

      Other brands will also face repercussions; for example, out of 1.28 million new cars Mazda sold in 2024, 343,000 were imported into the U.S. Subaru is particularly vulnerable in the American market, where it generated an impressive 71% of its total sales last year.

      As Munoz emphasized, “The U.S. is a crucial market for 14 of the 18 non-Chinese global automakers. For brands like Volkswagen, while the U.S. contributes a smaller portion of overall revenue, maintaining a presence is vital for their status as global players.”

      “Brands including Volkswagen, Volvo, Hyundai-Kia, Mercedes, BMW, Stellantis, Toyota, Nissan, Subaru, and General Motors will likely have to expand their production capabilities in the U.S. soon. They cannot afford to exit this market.”

      Despite these challenges, Trump’s assertion may hold some validity. His intent is for automakers to manufacture the vehicles they sell to American consumers domestically. It appears that if these tariffs persist, many manufacturers will have no choice but to comply or face declining sales as their imported models become less competitive compared to locally produced options.

      There may indeed be logic behind this approach, even if it means that, in the interim, domestic brands must also endure hardships.