The automotive industry has long operated as a global ecosystem, with intricate supply chains spanning continents and production strategies carefully calibrated to maximise efficiency. However, this carefully balanced system now faces significant disruption as new 25% tariffs on imported vehicles enter the US market, with additional country-specific tariffs adding further complexity to the landscape.
A market in transition
The United States represents a critical cornerstone of the global automotive market, with 16 million new vehicles registered in 2024. For decades, manufacturers have developed strategies based on various international and regional trade agreements that facilitated cross-border commerce and production. This created a manufacturing landscape where only 58% of vehicles sold in the US were assembled domestically, with another 22% coming from Mexico and Canada, and the remainder from Asia and other regions worldwide.
The implementation of these tariffs risks directly affecting 42% of all vehicles sold in the US market, fundamentally altering the economic principles that have guided the industry in recent years.
The surprising vulnerability of american brands
While conventional wisdom might suggest that American brands would be insulated from import tariffs, the data tells a different story. Tesla stands as an exception, with 100% of its US sales coming from domestic production, followed by Ford - one of the few US-based large manufacturers maintaining approximately 80% domestic production.
However, other major American groups have embraced manufacturing strategies based on international relations that now leave them exposed.
Take Stellantis, for example, which produces only 55% of its US-sold vehicles domestically, with a substantial 42% coming from Mexico and Canada. Similarly, General Motors manufactures just 46% of its US-registered vehicles within US borders.
To illustrate a magnitude of the impact of those tariffs (by simply applying the +25% to the average retail price), some of the iconic models like the Chevrolet Silverado 1500 or the GMC Sierra 1500, which are mostly produced abroad, could see their price tags increasing by up to $15,000.
New entrants caught in the crossfire
Perhaps most vulnerable in this shifting landscape are automotive newcomers who had built their American market entry strategies around the previous trade framework. Brands like Ineos and Vinfast, which have focused heavily on the US market for their growth, now find their plans complicated by tariffs that could significantly impact their pricing and competitiveness.
However, this effect is also likely to impact well-established brands like Chrysler, which sells 90% of its global volumes in the US with 100% of its production abroad. Subaru, for which the US represents more than 70% of total volumes, with only a third of its production based in the country. Among luxury brands, McLaren seems to be the most exposed, with more than 40% of its global sales volumes in the States.
The ripple effect through the supply chain
Beyond the final assembly of vehicles lies an even more complex reality. Antonio Filosa, COO of Stellantis Americas, recently announced not only production pauses in Mexico and Canada but also temporary layoffs affecting US workers who produce components destined for these cross-border factories.
This highlights an often-overlooked aspect of the automotive industry: the intricate web of suppliers that crosses borders multiple times before a finished vehicle reaches the showroom floor. Even vehicles assembled in the US often contain substantial imported components—meaning that the effects of tariffs will likely extend far beyond the 42% of vehicles that are fully imported.
A new automotive landscape takes shape
What emerges from the data is not a simple story of winners and losers, but rather a fundamental reshaping of how the automotive industry operates. The global strategies built around international trade agreements are being reconsidered, supply chains are being reconfigured, and the economic realities of vehicle production are changing.
As the industry adapts to this new landscape, one thing remains clear: the ripple effects of these tariffs will extend far beyond simple border calculations, reshaping an industry that touches virtually every corner of the global economy.
Navigate industry complexity with JATO Advisory
At JATO, we specialise in providing in-depth, global data and insights to help automotive manufacturers navigate the complexities of today’s automotive industry. Our global team of analysts leverage a wealth of data such as vehicle registrations, model mix, and market-specific trends to develop tailored insights.
With a dedicated team of consultants and analysts, JATO Advisory empowers OEMs to make data-driven decisions to help them stay competitive in a complex and rapidly changing environment.