Trump Reportedly Warned By Foreign Automakers: No Trade Deal Could Mean Loss Of Cheap Cars

Overseas automakers have reportedly warned the Donald Trump administration they may stop selling some of their lowest-priced vehicles in the U.S. if the U.S.-Mexico-Canada Agreement is weakened or not extended.

Budget-Friendly Cards To Be Affected

According to a report by The Wall Street Journal, the message was delivered to the president's economic advisers, citing people familiar with the conversations.

The report said Nissan, Hyundai and Toyota are among the companies most exposed because they still offer small, budget-friendly cars after Detroit-based automakers such as Ford Motor Co. (NYSE:F), General Motors Co. (NYSE:GM) and Stellantis NV (NYSE:STLA) shifted their lineup toward trucks and SUVs.

Trump Tariffs

The trade backdrop has changed since Trump signed USMCA in 2020, which allowed qualifying North American-built vehicles to enter tariff-free.

In his second term, the administration imposed auto duties that apply a 25% charge to the portion of a vehicle that isn't U.S. content, even for models that previously would have met USMCA rules.

US Companies Cannot Produce Affordable Options

Industry groups argued that low-cost models depend on predictable cross-border sourcing for parts and assembly. "U.S. automakers cannot continue to produce affordable options for American consumers without the certainty and scale provided by a trilateral USMCA," said Jennifer Safavian, who leads Autos Drive America to WSJ.

The White House pushed back, saying its approach is aimed at rebuilding domestic production. Automakers "need to reshore their manufacturing back to the United States," said spokesman Kush Desai, according to the report.

Increase In Costs

According to the report, the potential loss of cheaper models would collide with the administration's messaging on the cost of living, with the average new-car transaction price around $50,000.

Honda said it would keep selling the Civic in the U.S. even if a trade deal lapses, but warned the financial math gets tougher without stable free trade across North America.

The administration has offered limited relief, including a mechanism that lets automakers recover some parts-related tariff costs. It also opened a pathway last week for Canadian and Mexican steel and aluminum suppliers to seek lower rates if they commit to expanding manufacturing footprints in the U.S.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.