US President Donald Trump has announced a fresh string of tariffs abroad, this time targeting the global automotive sector.
From April 2, vehicles and car parts coming into the US will face a 25 per cent tariff, a move Trump said would spur investment into the homegrown automotive industry.
Leading automotive manufacturers will be left reeling from the last-minute tariffs, as the US is by far the leading destination for car exports in the world.
This will also affect US buyers, as nearly half of all cars sold in the States in 2024 were imported from abroad.
Crucially, Trump’s tariffs don’t just hit at foreign-made passenger cars; but also their key parts, like engines and electrical components, and light trucks.
This means that American car brands will also face shocks to their supply chain; particularly those who manufacture abroad, like Ford.
The US imported around eight million cars alone last year, with trade valued at around $240 billion (£186 billion).
Meanwhile total imports of automotive vehicles, engines and parts reached over $474 billion (£365 trillion) in value over 2024, according to the US Bureau of Economic Analysis (USBEA).
Which countries will suffer?
The top light-vehicle exporters to the United States are Mexico, Japan, and South Korea.
In 2024, the US imported $214 billion in passenger vehicles from Mexico alone, according to the USBEA, and $192 billion in vehicle parts.
The next highest import destination is Japan, which exported $39.9 billion in passenger vehicles and $14.5 billion in parts last year.
The US imported $49.4 billion of passenger vehicles and parts from South Korea in 2024, followed by $46.8 billion from Canada, and $35.5 billion from Germany.
In 2024, 2.8 million light vehicles were shipped from Mexico alone to the US.
Nearly half of these car exports were American brands manufactured in Mexico, according to the Council on Foreign Relations; with Ford, General Motors, and Chrysler all produced in Mexico to export to the US.
Mexico has already been in the firing line of Trump’s tariffs, with a 25 per cent tariff on all good exports which was soon rescinded, and likely more to come.
Meanwhile the UK also stands to lose out from the substantial tariff on vehicle imports.
The UK’s number-one goods export to the US is cars, worth £8.3 billion in the year up to November 2024. The US is also the top foreign buyer of British-made cars, from Aston Martin to MINI.
In 2024, the US imported $9.7 billion in passenger vehicles and $1.5 billion in vehicle parts from the UK. Though smaller than other countries, this is a sizeable amount of UK-US trade.
Which brands will be hit hardest?
British company Jaguar Land Rover (JLR) is one of the brands that will be worst affected by the tariffs, as its iconic Defender and Range Rover lines are highly popular in the US.
The US is JLR’s top sales destination worldwide, even higher than the UK.
And unlike other brands with a big US footprint, 100 per cent of JLR cars sold in the US are imported from factories abroad; meaning that the entirety of the brand’s sales will be affected by the tariffs.
Volvo, Mazda, Volkswagen, Mercedes-Benz and more are all companies that rely on imports for over 50 per cent of their sales in the US, research from Global Data shows.
Meanwhile, US-manufactured cars like Tesla will suffer less from tariffs, and therefore could get a competitive advantage in the vehicle market.
However, US brands including Ford and even Elon Musk’s Tesla import vehicle parts from China and worldwide, so will face increased costs to their supply chain.
China was one of the top exporters of vehicle parts to the US in 2024, at $14.7 billion behind only Mexico and Canada, according to USBEA figures.
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