Major auto-exporting nations are in crisis mode after President Trump announced new 25% tariffs on imported autos and auto parts, starting April 3.
Nearly half of new passenger vehicles sold in the U.S. in 2024 were assembled outside the U.S., according to data from S&P Global Mobility. Most come from five nations: Mexico, Japan, South Korea, Canada and Germany.
Economic driver
Cars drive the economies of these nations and typically account for a big proportion of exports.
U.S. auto tariffs could reduce economic growth in Japan by 0.2 percentage point, said Takahide Kiuchi, executive economist at Nomura Research Institute. If Japanese carmakers shift production to the U.S., they would maintain sales but “it would be a headwind for the Japanese economy,” he said.
The automotive industry is also a linchpin of the European economy, accounting for 7% of the European Union’s economic output. For Germany, auto exports to the U.S. account for close to half a percent of value added in the economy, according to Capital Economics.
The impact of tariffs would stretch deep into the German supply chain. Roughly a third of small and midsize automotive suppliers surveyed by the country’s automotive trade association last month expected to be directly affected by U.S. tariffs.
Big exporters
The world’s biggest carmaker, Toyota, shows how the industry relies on exports to the U.S. American showrooms for Toyota feature Prius hybrids made in Japan, RAV4 sport-utility vehicles made in Canada and Tacoma pickups from Mexico.
Last year, Toyota sold 2.3 million vehicles in the U.S. About a quarter of those vehicles came from Japan, and an additional quarter or so shipped from Canada and Mexico. The remaining half were built in the U.S., a Toyota spokesman said.
Many non-U. S. automakers get a quarter or more of their sales in the U.S.
Trump said he wanted the carmakers to move their production to the U.S. Hyundai said at the White House on Monday that it would invest an additional $21 billion in U.S.-based car manufacturing and supply chains for critical materials, including a $5.8 billion steel mill to be built in Louisiana.
German luxury brands Mercedes-Benz and BMW have developed manufacturing bases for sport-utility vehicles in the U.S. in recent decades, but they continue to ship sedans across the Atlantic as well as engines and transmissions for the SUVs.
All the vehicles sold in the U.S. by Audi and Porsche, both owned by the Volkswagen Group, are imported. Honda’s exports to the U.S. include the made-in-Canada CR-V and Civic and Mexico-produced HR-V. Hyundai’s exports include the hybrid Tucson and Palisade SUV.
Governments hit back
South Korea said it planned emergency support for the auto industry. Trade minister Ahn Duk-geun said the industry faced “considerable damage.” Japan said it would ask Trump for a tariff exemption, and Prime Minister Shigeru Ishiba said retaliation was an option.
In Brussels, European Commission President Ursula von der Leyen condemned the tariffs as “bad for businesses, worse for consumers,” while saying the European Union would seek negotiated solutions.
German Economy Minister Robert Habeck said the EU should respond decisively and “not give in to the U.S.”
Write to Yoko Kubota at yoko.kubota@wsj.com and Stephen Wilmot at stephen.wilmot@wsj.com