Trump's tariffs and the impact on the US auto industry

Whether tariffs are imposed or not, the truth is that President Donald Trump's new tariffs on cars from Mexico, Canada, China and, eventually, Europe will have a major impact on the North American auto industry.

Last year, 16.1 million light vehicles were sold in the US, 61% of which were produced domestically. This is down one percentage point from 2023 and is similar to the share of these vehicles ten and twenty years ago.

Trump's latest announcements concern products from Mexico, Canada and China. This includes millions of cars. According to our data, sales of Mexican-made light vehicles in the US will reach 2.19 million units in 2024, or almost 14% of the total market.

The sales volume is up 13% compared to 2023, compared to a growth of 1.7% for US-made vehicles. Mexico is the second most popular origin for new vehicles sold in the US and an important production and export centre for many automakers.

The Latin American nation is the most important origin for Volkswagen Group vehicles sold in the US, accounting for almost 44% of total sales in 2024. It is the second most important manufacturing country for vehicles sold in the US by Stellantis, Nissan, Mazda, Honda and Ford.

The Volkswagen Group is the OEM most exposed to potential tariffs on goods produced in Mexico. Four of its five best-selling models in the US in 2024 come from its plants in Mexico.

Where vehicles sold in the US are produced

Photo by: Motor1.com

Cars produced in Canada lose ground

The importance of Mexico for manufacturers selling cars in the US contrasts with the declining role of Canadian production. Although it was the fifth most popular origin for cars sold in the US in 2024, last year more cars were sold from the European Union than from Canada.

At best, 18% of Toyota's US car sales were Canadian-made, followed by Stellantis with 14%. Only 5% of Ford cars sold in the US came from a Canadian plant.

Cars from Mexico and Canada

What will the European Union do?

It is difficult to predict what the current administrations will do on trade. The actions taken by the Trump administration follow campaign promises, but not necessarily trade protocols. The only thing that is clear is that importing cars into the US will become more complicated for any nation. That is why the European Union should prepare for a possible trade restrictions.

Last year, more than 820,000 light vehicles were sold in the US from EU factories. This is more than the total number of cars manufactured in Canada.

US sales of cars produced in the European Union (2024).

Photo by: Motor1.com

The three German manufacturers (Volkswagen Group, Mercedes and BMW) accounted for 73% of the total. While Mexico was the main origin for Volkswagen Group sales in the US, the European Union was the main origin for Mercedes sales in the US. Other manufacturers, such as the Geely Group, owner of Volvo, sold 135 300 new vehicles in the US last year, of which 110 000 came from the EU.

Chinese cars, on the other hand, still have a marginal market share of just 0.35 percent in 2024, or 56,800 units. Tariffs on Chinese goods seem more political than anything else, given the marginal role of Chinese cars in the US auto industry.

More industry analysis:

How much electric car prices have fallen since 2018

The Chinese are getting stronger - but how are Audi, BMW and Mercedes doing

In 2024 almost half of all new cars came from China

Cars are getting bigger and bigger - here's why

The author of the article, Felipe Munoz, is Automotive Industry Specialist at JATO Dynamics.