Trump's Tariffs Expected to Reduce Global Vehicle Production by 1.5 Million | Carscoops

      North American production output may decrease by as much as 9% throughout 2025.

      8 hours ago

      by Brad Anderson

      Analysts anticipate that 87.9 million new vehicles will be produced worldwide this year.

      This signifies a 2% reduction, amounting to approximately 1.55 million fewer vehicles.

      Several automakers are increasing their production in the USA due to rising tariffs.

      President Donald Trump’s tariffs are not only increasing the prices of everyday consumer goods and vehicles but are also expected to contribute to a decrease in overall car production this year. North America, in particular, might experience the impact, with U.S. sales volumes also projected to decline.

      Experts from S&P Global Mobility estimate that we could finish 2025 with 87.9 million new vehicles manufactured, marking a 2% decrease from the previous year, equivalent to 1.55 million vehicles. This could represent the second consecutive year of production declines following a drop last year due to factory shutdowns among several brands in Japan.

      The U.S. will be affected by the tariffs. As reported by Nikkei Asia, nearly 50% of all new cars sold domestically are produced internationally. Furthermore, between 30% and 60% of auto parts are also imported. With this context, it is likely that North American vehicle production could decline by 9% by the end of 2025, while U.S. sales volumes may fall by 3%.

      The repercussions of the tariffs may persist for an extended period. Various automakers, including Audi and Jaguar Land Rover, have stopped exports to the United States and will manage their existing inventories, hoping that Trump may relax tariffs on the automotive sector in the upcoming months.

      Some car manufacturers are taking the steps the President encouraged: relocating some production to the United States. Last week, Volvo announced that it will begin producing a second model locally, likely either the XC60 or XC90 in both mild-hybrid and plug-in hybrid versions. Honda is also shifting production of the Civic Hybrid to the U.S., and Mercedes-Benz is planning to expand its capacity there. Nevertheless, this will require "some years."

      Meanwhile, last month, VW Group CEO Oliver Blume indicated that Audi has been discussing with the Trump administration the establishment of a factory in the U.S. While VW already operates plants in the U.S., all Audi models sold domestically are still imported. Such moves might be seen as favorable, but U.S.-made vehicles could ultimately be more expensive than their foreign counterparts, primarily due to higher labor costs.