The customs restrictions introduced by the US President are not only increasing the cost of consumer goods and automobiles but will also cause a decrease in the total volume of auto production this year. North America will be hit the hardest, where a drop in sales is also expected.
Experts from S&P Global Mobility forecast that by the end of 2025, 87.9 million new cars will be produced, which is 2% less than last year’s figure. This is the second consecutive year of declining production – last year’s drop was linked to factory shutdowns in Japan.
The USA will feel the consequences of the tariff changes particularly acutely. Almost half of the new cars sold on the American market are produced outside the country. Furthermore, from 30% to 60% of auto components are also imported. In connection with this, automobile production in North America could shrink by 9%, and sales volumes in the USA by 3%.
The impact of the customs tariffs could last a long time. Manufacturers such as Audi and Jaguar Land Rover have already suspended exports to the USA, planning to sell existing inventories and hoping for a softening of customs policy in the future.
Some companies have already begun moving production to the USA, as the President expected. Volvo announced plans to assemble hybrid versions of the XC60 or XC90 crossovers at its US facilities. Honda is also moving Accord production to the USA, and Mercedes-Benz is increasing the capacity of its American plants, although this process will take several years.
Volkswagen Group CEO Oliver Blume reported that Audi is in negotiations with the Trump administration regarding building a plant in the USA. Despite the existence of Volkswagen production capacity in America, all Audi models are still imported. Although such steps can be considered a success, the cost of cars produced in the USA may turn out to be higher due to greater labor costs.