Global car production this year is expected to decrease by 2% compared to last year due to the impact of tariff policies pushed by U.S. President Donald Trump.
According to S&P Global Mobility and Nihon Keizai Shimbun on May 2, global car production this year is projected to decrease by 1.55 million units from the previous year to 87.91 million units. This surpasses the annual volume (about 1.4 million units) that Japan exports to the U.S. market. Nikkei noted, “The decrease in car sales due to changes in the global environment is the first in five years since 2020 when the global supply chain was hit by the COVID-19 pandemic.”
The U.S. car market is directly impacted by President Trump’s tariff policies. The U.S. automotive industry’s annual production volume is about 16 million units, ranking second in the world after China. The issue is that about 50% of completed vehicles sold in the U.S. are imported, and depending on the manufacturer, 30-60% of parts rely on imports. However, due to tariffs on automobiles and parts, new car sales in the U.S. are expected to decrease by 3% this year. A decrease in new car sales leads to reduced exports to the U.S. and production cuts by major automakers. In particular, car production in North America, including Mexico and Canada, which have a high proportion of exports to the U.S., is expected to shrink by 9% compared to the previous year.
While President Trump self-praised during his 100-day inauguration speech in Michigan, saying, “We are protecting autoworkers,” the wave of layoffs in the U.S. due to tariffs seems to be intensifying. Volvo Group, a Swedish commercial vehicle giant, announced last month that it would cut up to 800 jobs at three U.S. plants, accounting for 10% of factory employees. Stellantis also recently announced temporary layoffs of 900 employees at its U.S. parts plant.
The U.S. has been imposing a 25% tariff on imported cars since May 3, and plans to extend this to auto parts from June 3. Prior to this, President Trump recently introduced mitigation measures, including temporarily reducing the tariff burden for two years for companies that manufacture cars in the U.S. using imported parts. Reuters projected that despite these mitigation measures, car companies would have to bear additional tariffs of up to $12,000 (about 17.22 million won) per vehicle. CNBC predicted that while car companies’ April sales increased as consumers worried about tariff-induced price hikes rushed to purchase vehicles, this trend would not continue.
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