Export markets remain a key challenge for global carmakers, with the US in focus. Half of all cars sold there are built abroad, and in 2024, the top five exporters – Mexico, Japan, South Korea, Canada, and Germany – shipped over 7.4 million vehicles to the US.
Although tariffs have been reduced from the initial 25-27.5% for most car imports, the 15% rate is still a significant burden, which carmakers are unlikely to fully absorb in the medium term. Additionally, the significantly weakened dollar has made US car imports more expensive, compounding the pressure.
While tariffs on US car exports to regions like Europe will be removed, it’s disappointing that companies with major US production – such as BMW (which exported 225k mostly SUVs from the US) and Mercedes – won’t benefit from netting those exports.
Between January and July 2025, US car prices hardly showed any increase, which indicates that carmakers are absorbing a significant portion of the cost in the short term. This is already evident in second-quarter company reports, with the world’s largest carmakers, including the big three American manufacturers GM, Stellantis and Ford, reporting multi-billion dollar impacts.
Fears of slowing sales, lingering trade policy uncertainty, and the 2021-23 price surge may be driving a more cautious pricing strategy.
*We expect car companies to look into options to increase production in existing US facilities rather than large investments