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GlobalData carried out a detailed analysis on the likely impact of prices on automotive imports to the United States, including finished light vehicles (LV) and automotive parts.
The following represents a summary of prices related to the automotive industry:
As of April 3, 25% of prices are in force on imports of finished vehicles. Although this applies to all countries, Canada and Mexico vehicles which comply with the rules of the USMCA trade agreement are only subject to taxes on their non -American content. American content is defined as “the value of the parts” fully obtained, produced entirely or substantially transformed in the United States “.
For vehicles that do not comply with the USMCA and imported from Canada or Mexico, 25% additional rates are hidden in addition to existing prices, which increases the total to 50% in some cases.
25% of prices on a number of automotive parts – including engines, transmissions, the powertrain and electrical components – will come into force on May 3. Parts that comply with the USMCA rules are not taxed as long as the US trade department establishes a process to apply the price to non -American content.
25% prices on steel and aluminum imports are also in force. Products derived from these metals are also subject to prices, which would include certain automotive parts such as bumpers. There is no exemption for certain business partners, as had been the case before.
The impact of these prices will be of large scale, given that around 47% of the LVs sold in the United States in 2024 have been assembled outside the country, and those which have been built in the United States generally contain significant percentages of imported content.
Although some of the additional costs can be absorbed by OEMs and the supply chain, we expect the majority of cost increases to be transmitted to the consumer. This will exacerbate existing problems with the affordability on the American market and will therefore reduce sales.
Our forecasts for the first quarter of 2025 provided American sales of 16.1 mins in 2025 and 16.4 MN units in 2026. However, this forecast was produced before the last announcements and assumed that the threat of prices was largely a negotiation tactic which was used to extract concessions from other countries. Although we have taken into account a slight negative impact on sales due to the uncertainty created by the constantly evolving commercial image, we do not assume that prices would come into force. We now estimate 2025 American sales at 14.9 MN units. This represents a decrease of 6.6% in annual sliding and a reduction of 1.2 minutes compared to our T1 2025 forecasts. For 2026, we expect sales to decrease more, to 14.5 min units, the supposed prices to be in force for the full year. We assume that the prices remain in place permanently, because it could be difficult for future administrations to suppress them due to the union opposition. Over time, a greater location of production and adjustments in consumer expectations concerning prices could see the sales gradually recover, while remaining below the prospects for pre-tail.
Our new forecasts incorporate all the tariff measures described above, although some of the details of how these prices will be applied in reality, and what models will fall due to the non-compliance of the USMCA, are not yet clear. There are risks both upward and lower forecasts, according to how the prices are applied and the way EMOs and consumers react, as well as developments in the wider economy. As such, there is a much higher degree of uncertainty in our forecasts than it would generally not be the case.
In 2024, car manufacturers built 15.4 minutes LV in North America and the production footprint was made up of 66% of models built by the United States, while Mexico production represented 25% and Canada 9%. However, helped by new investments in Mexico, their share was to reach more than 26% in 2025.
Under the implementation of the current rate, a significant risk would be added to our North American LV production forecasts and to the manufacturing footprint which took place there. The prices could potentially reduce nearly 850,000 units (-5.5%) on forecasts of 2025 and plunge the result of the full year to 14.5 minutes units-the lowest total since 2021 during the semiconductor crisis. If the prices are maintained until 2028, they could withdraw more than 4.0 minutes from our basic forecasts during the period.
Although we are already seeing several production stops in Canada and Mexico due to prices, especially in the assembly factories of Windsor and Toluca in Stellantis as well as in the Nissan Compass JV factory in Aguascalientes, it is more necessary that the Automakes managed their affected inventory and that the production is bankrupt due to the disturbance of the parts linked to the price impacted plants.
While North American production (United States / Canada / Mexico) dominates the offer of vehicles on the American market, almost a quarter of US VV sales come from elsewhere.
Japan and Korean vehicles, combined, represent around 17% of US LV sales, while European assembled models have more than 5%. This level of exposure to the demolished American market will thus have an impact on the volume of production in these regions.
While European production LV could be negatively affected by an annual average of 120K, Japanese and Korean volumes could slide from 260k and 230K, respectively.
It depends a lot on the rooted nature of these new prices as well as the extent of potential reprisals. The risks are high: a world trade war is probably already underway and the dynamic impact on supply chains, geographic supply models and, in fact, global economic growth should emerge.
This article was published for the first time on the dedicated research platform of GlobalData, the Automobile Intelligence Center.
“Globaldata reduces the prospects for the sale of US light vehicles after pricing announcements” was initially created and published by Just automaticA brand belonging to GlobalData.
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