Trump auto tariffs Japan, South Korea, Germany exposed amid USMCA exemption for Canada and Mexico

Donald Trump's so-called Liberation Day coincided with previously announced 25% tariffs on imported cars taking effect. His latest tariff salvo delivered worse-than-expected news (especially for Asian economies) and unnerved global markets.

However, Mexico and Canada were spared much of the fallout due to the Trump-negotiated USMCA agreement. Cars and auto parts compliant with that deal will be exempt from the president's global tariff plan, preserving the integrated North American supply chain that can see components cross borders many times before a vehicle is assembled.

The automotive powerhouses of Japan, South Korea and Germany will face tariffs, meanwhile. This has the potential to profoundly change the global trade landscape and supply chains. Unless Trump reverses course, US consumers will be paying much more for imported cars.

Indeed, imports had become ever more popular with Americans, as our subsequent charts show. The high-water mark for consumers buying American came during the Clinton years, the heyday of the gas-guzzling sports-utility vehicle (SUV) and cheap oil; only about 15% of vehicles sold were imports. As oil surged in the 2000s, more fuel-efficient imports became increasingly popular. American automakers regained share after the post-global financial crisis bailouts, only to lose it again since 2020.

Domestic production averaged 118,000 vehicles per month last year; in 1994, that figure stood at 550,000. Imports' share soared to almost 40% in 2024 - a statistic that the president is keen to change.

The share of imported cars within total car sales in the US stood at 30% in March. This share is higher than in the EU (around 25%) and much higher than that seen in many Asian nations.