USD
GBP 
CNY 
EUR 
INR 
JPY 
MYR 
ZAR 
KRW 
THB 
Cost Pressures Expected in the Medium Term as Potential Disruptions to Established Supply Networks Prompt Automotive OEMs to Recalibrate Sourcing and Manufacturing Strategies
18-Aug-2025
Global
Market Research
MHE0-01-00-00-00
AU_2025_33732
US President Donald Trump imposed a 25% tariff on imports of passenger vehicles, light trucks, and certain automotive parts (engines, transmissions, powertrain parts, and electrical components, among them) on March 26, 2025. He also announced a more comprehensive set of “reciprocal tariffs,” starting at 10% on almost all goods from most countries.
Subsequently, although the core 25% tariffs on imported vehicles and parts were retained, President Trump temporarily suspended several additional retaliatory tariffs and delayed tariff implementation on United States-Mexico-Canada Agreement (USMCA)-compliant automakers and goods. This was done mainly to avoid cumulative tariff burdens and assuage US automakers about the economic and supply chain fallout of these measures.
Government policies, including the termination of EV incentives, the pause on charging infrastructure funding, and the rollback of EV mandates, are projected to slow the growth of EVs in the United States over the next 5 years. US EV manufacturers will find the going increasingly challenging as the reliance on imported lithium-ion batteries and rare earth elements, most of which come from China and other Asian suppliers, will mean higher costs.
As uncertainty continues to swirl, questions loom about how the highly intertwined, hyper-globalized automotive industry will be affected. What will the future hold for both domestic and foreign automakers, manufacturing output, component suppliers, supply chains, and consumers?
This inflationary effect, coupled with the dial back on EV incentives, may artificially extend ICE dominance in the short term but will weaken their global competitiveness over the long term. Overall, as automakers divert capital toward tariff mitigation and supply chain restructuring, rather than R&D, innovation in transformative technologies, including electrification, will lose out.
Consumers have yet to feel the impact of tariff increases on auto parts in terms of higher prices. This is due in part to competitive pressures and strategic decisions taken by automakers. However, this scenario is poised to change as competitive pressures diminish and companies seek to maintain profitability.
In drawing up roadmaps for the future, automakers are poised to reassess their auto parts sourcing strategies and manufacturing footprint. Many are turning to regionalized production and supply chains in a bid to minimize tariff exposure and maintain cost competitiveness in the long term.
Author: Joe Praveen
Scope of Analysis
- In 2025, the global trade and economic growth momentum is forecast to be a complex function of political, trade, and policy moves made under the second Trump administration in the United States.
- Following 3.2% real GDP growth in 2024, the global economy will likely maintain 3.2% to 3.3% annual growth momentum through to 2028, with emerging markets (EMs) retaining their leaderboard positions in terms of economic growth.
- Our baseline scenario considers President Trump’s 25% tariff on all Mexican and Canadian imports and a 10% tariff on Chinese imports, alongside proportional retaliatory tariffs from Mexico and Canada.
- Our conservative scenario assumes between 25% and 35% tariffs on Canadian and Mexican imports, 60%+ tariffs on Chinese imports, 10% to 20% blanket tariffs on all imports, and 200%+ tariffs on car imports from Mexico. Approximately 50% to 60% tariffs on key US exports and 10% to 25% tariffs from Canada, Mexico, and the EU are assumed as part of retaliatory moves.
- Between 2025 and 2028, within the base case, the impact on GDP will remain muted with key Asian EMs buoying global demand and economic growth. However, in the conservative scenario, adverse and protracted trade wars can potentially shave off 1.5% from global GDP growth in 2028, push global inflation beyond 6.0%, and induce a multiquarter recession in economies such as the United States, Canada, Colombia, Mexico, Germany, and South Korea.
| Scope | Details |
|---|---|
| Geographic coverage | United States, Global |
| Study period | 2024–2028 |
| Base year | 2024 |
| Forecast period | 2025–2028 |
| Monetary unit | US Dollars |
Research Scope
Content Present in Points
- Companies to Action
- Best Practices
- Frost Radar
- Growth Opportunities
- Growth Generator
- Transformation
- Ecosystem
Scope
| Scope Item | Description |
|---|---|
| Market Analysis | Assessing the global automotive landscape under Trump 2.0 policies. |
| Regulatory Impact | Evaluating how new policies affect regulations in the automotive sector. |
| Competitor Analysis | Identifying key players and their strategies in response to the policies. |
| Consumer Trends | Understanding shifts in consumer behavior due to these policies. |
Scope of Analysis
Why is it Increasingly Difficult to Grow?
The Strategic Imperative
Strategic Imperatives
Key Takeaways
Global Macroeconomic Risks and Opportunities Emerging from Trump 2.0, 2025–2028
Impact of Trump 2.0 Tariffs on the Automotive Industry
Dependence of Key Automakers’ US Sales on Imports
Tariff Impact on Vehicle MSRP—Analysis of Ford F-150 Model
Impact of Tariffs on Steel and Aluminium—Analysis of Toyota Camry
Reaction of Key OEMs to US Tariffs
Executive Orders Issued by US Presidents in the First 100 Days
List of Key Executive Orders Issued by Donald Trump
Global Growth to Slow from 3.2% in 2024 to 2.8% in 2025 Under the Baseline Tariff Scenario
Tariff Wars to Further Diversify and Decentralize Supply Chain Strategies
Global Growth to Slow to 2.8%, Avoiding a Recession in 2025; Weaker China to Weigh on APAC Growth
Executive Orders with Possible Implications for the Automotive Sector
Policies Specific to Vehicle Imports
Impact of Trump 2.0 Policies on the US EV Market
Passenger Vehicle and Component Imports from Mexico to the United States
Light Vehicle Exports into the United States from Mexico
Key Automotive Components Manufactured in Mexico
Key Transmission and Assembly Plants in Mexico
Tariffs on Mexico and Impact on the Automotive Industry—Key Takeaways
Passenger Vehicle and Component Imports from Canada to the United States
Canada’s Automotive Production Landscape
OEM Models Dependent on Canada
Key Automotive Components Manufactured in Canada
Tariffs on Canada and Impact on the Automotive Sector—Key Takeaways
Passenger Vehicle and Component Imports from China to the United States
China’s Automotive Production Landscape
OEM Models Dependent on China
Key Automotive Components Manufactured in China
Key OEMs’ China Impact Analysis
Tariffs on China and Impact on the Automotive Industry—Key Takeaways
Passenger Vehicle and Component Imports from Germany to the United States
Germany’s Automotive Production Landscape
OEM Models Dependent on Germany
Key Automotive Components Manufactured in Germany
Key OEMs’ Germany Impact Analysis
Tariffs on Germany and Impact on the Automotive Industry—Key Takeaways
Passenger Vehicle and Component Imports from South Korea to the United States
South Korea’s Automotive Production Landscape
Key Automotive Components Manufactured in South Korea
OEM Models Dependent on South Korea
Tariffs on South Korea and Impact on the Automotive Industry—Key Takeaways
Passenger Vehicle and Component Imports from Japan to the United States
Key Automotive Components Manufactured in Japan
Japan’s Automotive Production Landscape
OEM Models Dependent on Japan
Tariffs on Japan and Impact on the Automotive Industry—Key Takeaways
Growth Opportunity 1: Recalibrate the Supply Chain
Growth Opportunity 2: Reassess the Powertrain Strategy for the United States
Growth Opportunity 3: Focus on Innovation to Save Costs
Benefits and Impacts of Growth Opportunities
Next Steps
List of Exhibits
Legal Disclaimer
Speak directly with our analytics experts for tailored recommendations.
Recent related Autonomous Vehicles research
31 Aug 2026 | Global | Market Outlook
Off-Highway Equipment Market Predictions and Growth Opportunities, Global, 2026
The global off-highway (OHW) equipment industry enters 2026 amid a complex and evolving macroeconomic environment characterized by geopolitical uncertainty, energy price volatility, and shifting trade dynamics. While the baseline outlook suggests moderate global GDP growth of about 3%, downside scen...
27 Aug 2026 | Global | Market Outlook
Global EV Charging Infrastructure, 2026: Growth Trajectory and Emerging Opportunities
The rapid rise of electric vehicles (EVs) is intensifying the need for a robust, accessible charging infrastructure. Enabled by IoT integration, EVs are becoming a smarter alternative to conventional ICE vehicles. Expanding fast-charging stations along highways and at key destinations is critical to...
21 Aug 2026 | South Asia, Middle East & North Africa | Market Research
High-Traffic Truck Charging Infrastructure Revenue Opportunities, India, 2026–2041
India’s electric truck charging ecosystem is entering a critical phase of commercialization, with revenue generation and investment returns emerging as key focus areas alongside infrastructure deployment. As medium- and heavy-duty electric trucks scale up, charging infrastructure development across ...
21 Aug 2026 | Global | Technology Research
Growth Opportunities in Next-Gen Audio Processor, LiDAR, Radar, Air Mobility, ADAS and Battery
The Mobility Technology Opportunity Engine (TOE) covers innovations pertaining to Next-Gen Audio Processor, LiDAR, Radar, Air Mobility, ADAS and Battery among others.The purpose of the Mobility Technology TOE is to raise awareness of global technology innovations in self-propelled ground-based mobil...
20 Aug 2026 | Global | Market Outlook
2026 Prediction of Global Electric Vehicle Market
Over 21.6 million units of light-duty electric vehicles (EVs) were sold worldwide in 2025, representing a 23.5% year-over-year (YoY) growth. Battery electric vehicles (BEVs) accounted for 66.8% of all EVs sold, while plug-in hybrid electric vehicles (PHEVs) accounted for 33.2%. The PHEV share declin...
Purchase includes:
- Report download
- Growth Dialog™ with our experts
Growth Dialog™
A tailored session with you where we identify the:- Strategic Imperatives
- Growth Opportunities
- Best Practices
- Companies to Action
Impacting your company's future growth potential.
Subsequently, although the core 25% tariffs on imported vehicles and parts were retained, President Trump temporarily suspended several additional retaliatory tariffs and delayed tariff implementation on United States-Mexico-Canada Agreement (USMCA)-compliant automakers and goods. This was done mainly to avoid cumulative tariff burdens and assuage US automakers about the economic and supply chain fallout of these measures.
Government policies, including the termination of EV incentives, the pause on charging infrastructure funding, and the rollback of EV mandates, are projected to slow the growth of EVs in the United States over the next 5 years. US EV manufacturers will find the going increasingly challenging as the reliance on imported lithium-ion batteries and rare earth elements, most of which come from China and other Asian suppliers, will mean higher costs.
As uncertainty continues to swirl, questions loom about how the highly intertwined, hyper-globalized automotive industry will be affected. What will the future hold for both domestic and foreign automakers, manufacturing output, component suppliers, supply chains, and consumers?
This inflationary effect, coupled with the dial back on EV incentives, may artificially extend ICE dominance in the short term but will weaken their global competitiveness over the long term. Overall, as automakers divert capital toward tariff mitigation and supply chain restructuring, rather than R&D, innovation in transformative technologies, including electrification, will lose out.
Consumers have yet to feel the impact of tariff increases on auto parts in terms of higher prices. This is due in part to competitive pressures and strategic decisions taken by automakers. However, this scenario is poised to change as competitive pressures diminish and companies seek to maintain profitability.
In drawing up roadmaps for the future, automakers are poised to reassess their auto parts sourcing strategies and manufacturing footprint. Many are turning to regionalized production and supply chains in a bid to minimize tariff exposure and maintain cost competitiveness in the long term.
Author: Joe Praveen
| Deliverable Type | Market Research |
|---|---|
| Industries | Automotive |
| No Index | No |
| Is Prebook | No |
| Keyword 1 | US automotive regulations |
| Keyword 2 | automotive OEM strategies |
| Keyword 3 | global trade impacts on auto |
| Podcast | No |
| Predecessor | None |
| WIP Number | MHE0-01-00-00-00 |