U.S. proposes new tariffs as foreign-built cars and U.S.-built models both face exposure

Foreign and U.S.-built cars face tariffs

As of June 2026, the U.S. auto tariff story is hitting from two directions at once. The Trump administration has proposed raising the USMCA vehicle-content rule to 82% North American content, with at least 50% of the vehicle’s value coming from the United States.

Imported vehicles face the clearest tariff pressure because many foreign-built cars are subject to added duties. U.S.-assembled vehicles are also exposed when they use imported parts, steel, or aluminum. That means buyers may see higher costs on both imported models and vehicles built in American plants.

USMCA talks could reshape car rules

U.S. and Mexican officials finished a first round of trade talks on May 29, 2026, with auto rules, metals, and security among the key topics. A second round is scheduled for June 16 and 17 in Washington.

Another round is planned in Mexico City during the week of July 20. The U.S. proposal would raise the North American content rule for vehicles and add a U.S.-specific content requirement. The USMCA review process can lead to extensions, revisions, or uncertainty, so automakers are watching it closely as they plan future production and pricing.

EU car tariffs face renewed uncertainty

In May 2026, the U.S. threatened to raise tariffs on EU car imports from 15% to 25%, after a 2025 trade framework had lowered the rate. However, a newer Reuters report in early June said U.S. Trade Representative Jamieson Greer stated the U.S. would uphold tariff caps set in trade agreements with the EU, Japan, and others.

The U.S. remains a major market for EU-built cars. ACEA data showed EU car exports to the U.S. totaled 667,794 units and were worth €30.9 billion in 2025. European luxury brands remain exposed because tariff uncertainty can affect the pricing, planning, and profit margins of imported vehicles.

German brands face heavy tariff risk

European luxury automakers remain sensitive to U.S. tariff changes because many of their high-margin models are imported into the U.S. market. If tariff rates on EU-built vehicles were raised from 15% to 25%, brands with significant European production and U.S. sales exposure could face additional pressure on pricing, margins, or both.

BMW has a major U.S. manufacturing base in South Carolina, which can reduce exposure for some SUV models. Mercedes-Benz also builds vehicles in Alabama, while Audi remains more exposed because it does not operate a U.S. assembly plant. The risk varies by brand, model mix, supplier base, and where each vehicle is assembled.

Tariff costs hit automakers hard

Auto tariffs have created multibillion-dollar costs across the industry since 2025. Toyota gave one of the largest warnings, saying U.S. import tariffs could reduce profit by about $9.5 billion for the fiscal year ending March 2026. Reuters later reported that General Motors expected tariffs to cut $2.5 billion to $3.5 billion from 2026 profits after revising an earlier estimate.

Ford has also warned of a multibillion-dollar tariff impact, while Stellantis expects a tariff burden of about $1.7 billion. European and Asian automakers have also reported high costs. The totals vary by company, timing, and accounting method, but the direction is clear: tariffs are pressuring automaker profits and future vehicle pricing.

Toyota’s North America profit fell

Toyota reported record net revenue of 50.684 trillion yen for the fiscal year that ended March 31, 2026. The company also reported global operating income of 3.766 trillion yen, down from the prior year.

In North America, tariffs, labor costs, and material costs weighed heavily on results. WardsAuto reported that Toyota’s North America operating income fell by 402.9 billion yen in fiscal 2026.

Reuters also reported that Toyota had warned that U.S. tariffs could cut profit by about $9.5 billion for the year ending March 2026. Strong sales did not remove the tariff pressure.

New-car prices rose in early 2026

New-vehicle prices rose in early 2026 as tariffs and higher model-year pricing added pressure to buyers. An industry report said average prices for vehicles added to inventory in the first quarter were up by about $1,315 from the same period a year earlier.

Destination fees also kept rising. Cars.com reported that domestic-brand destination fees now average almost $2,200, while Dealership Guy reported a $2,189 domestic average and a $1,476 import average. Those fees are added to the vehicle price, so shoppers can face higher costs before taxes, financing, and insurance.

U.S.-built cars still face parts costs

Foreign-built vehicles face the clearest tariff pressure, but U.S.-assembled models can also be affected when they use imported parts.

Kelley Blue Book says Trump announced a 25% tariff on cars built outside the United States and on many parts used in cars built here. Anderson Economic Group has estimated tariff costs for North American-assembled vehicles, showing that “American-made” does not mean tariff-free.

The exact cost depends on the model, supplier base, and imported content. For buyers, the key point is simple: U.S. assembly can reduce tariff exposure, but it does not remove it.

Cheap cars may face more pressure

Several foreign automakers have warned that some low-priced vehicles could become harder to keep in the U.S. market if USMCA rules change or tariff relief ends.

Reports have named Nissan, Hyundai, and Toyota among companies with exposure because they still sell lower-priced vehicles in the United States. Affordability was already strained before the 2026 talks.

Cars.com reported in 2025 that vehicles priced below $30,000 made up only 14% of new-vehicle inventory, down from 38% during the 2019 to 2021 period. Tariff pressure could make the entry-level market even tighter.

SUV production shifts toward U.S. plants

Automakers are giving U.S. production more attention as tariffs change the math for vehicles sold to American buyers. Volvo lists its South Carolina factory as part of its U.S. presence, while its U.S. lineup includes SUVs such as the XC60 and XC90. Industry reporting has also pointed to greater local production planning as brands seek ways to reduce tariff exposure.

BMW’s Spartanburg, South Carolina, plant is already a major U.S. SUV production base, and Mercedes-Benz also builds vehicles in Alabama. Tariffs are one reason automakers are rethinking where they build vehicles for American buyers, but the exact exposure depends on each model, plant, supplier base, and battery or parts sourcing.

Stellantis plans $13 billion U.S. push

Stellantis announced a $13 billion investment over four years to expand U.S. manufacturing, raise domestic vehicle production by 50%, and add more than 5,000 jobs.

The plan covers plants in Illinois, Ohio, Michigan, and Indiana. It includes five new vehicle launches, including a new Dodge Durango in Detroit and a midsize truck in Toledo, Ohio.

Reuters reported the move is partly aimed at preparing for tariffs and strengthening the company’s U.S. position. The investment also includes reopening the Belvidere, Illinois, plant and adding production programs across several U.S. sites.

Used car buyers face higher pressure

Used car buyers are facing a tighter market in 2026 as high new-vehicle prices push some shoppers toward pre-owned models.

Cox Automotive’s Manheim Used Vehicle Value Index showed used-vehicle prices rising earlier in 2026, and wholesale demand remained strong. CARFAX also tracks used-vehicle price trends and vehicle-history data that buyers use when comparing pre-owned models.

Tariffs do not directly apply to used cars, but higher new-car prices can increase demand for used cars. That can make affordable used vehicles harder to find.

Even used cars now come with $1,000 payments, which fits that pressure because used-car demand can rise when new vehicles become too expensive.

USMCA outcome could shape auto costs

The 2026 USMCA review could shape auto costs, sourcing plans, and production decisions across North America. The Trump administration has proposed tougher vehicle-content rules, including 82% North American content and a 50% U.S.-content requirement.

Foreign automakers have also warned that some lower-priced models could become harder to keep in the U.S. market if tariff relief is weakened.

U.S.-Mexico talks are scheduled to continue June 16 and 17, with another round planned for the week of July 20. The final outcome remains uncertain, but the stakes for car buyers and automakers are high.

Trump backs Biden-era 100% tariff on Chinese EVs, adding to the cost debate because tariffs can limit cheaper vehicle options while automakers face pressure to keep prices down.

Could new U.S. tariffs raise costs on both foreign-built cars and American-built models? Drop a comment.

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This slideshow was made with AI assistance and human editing.