Foreign automakers threaten to pull cheapest models from US market
Updated
Updated · Barron's · May 1
Foreign automakers threaten to pull cheapest models from US market
10 articles · Updated · Barron's · May 1
With USMCA renegotiation approaching, sub-$30,000 cars assembled in Mexico, including Kia K4s and Nissan Sentras, already face 2025 US tariffs that add about $1,000, Cars.com says.
The administration wants more US-assembled vehicles, but automakers and suppliers warn affordable models still depend on integrated North American parts and production across Canada, Mexico and the United States.
Autos Drive America and General Motors urged a revised trilateral deal that meets administration goals while preserving manufacturing scale, as US new-car prices and household annual payments have climbed sharply since 2019.
As automakers warn of pulling budget models, is the sub-$30,000 new car facing extinction in America?
Can the U.S. rebuild its auto industry without making new cars a luxury for the average family?
With North American trade in flux, could affordable Chinese electric vehicles find a backdoor into the U.S. market?
Automakers Warn: Without USMCA Renewal, Affordable New Cars Under $25,000 Will Vanish by End of 2026
Overview
Automakers warn that if the USMCA trade agreement lapses on July 1, 2026, a 25% tariff on vehicles and parts from Mexico and Canada will make affordable car models unsustainable, forcing their withdrawal from the U.S. market. This will shrink the pool of budget-friendly new cars, hurting low-income consumers and pushing many buyers into the used car market, where demand for affordable used and electric vehicles is rising. Rising average new car prices and the loss of EV tax credits further worsen affordability. The ongoing USMCA review and trade uncertainties are causing industry uncertainty and dampening investment, threatening the future availability of affordable new gasoline and electric vehicles.