Ford and Honda Adjust North American Production Amid Tariff Concerns, U.S. Content Focus
10 April 2025 · Uncategorized ·
Source: · https://finance.technews.tw/2025/04/10/usa-ingredients-are-a-common-issue/
On February 2nd, the United States announced reciprocal tariff policies excluding the automotive industry. According to TrendForce's latest research, tariffs on imported passenger vehicles and light trucks in the U.S. went into effect that day, with parts facing an implementation deadline of May 3rd; all will be subject to an additional 25% tax based on original rates. Vehicles and components compliant with the United States-Mexico-Canada Agreement (USMCA) can have non-U.S.-sourced portions taxed at a rate of 25%, pending establishment by the U.S. Commerce Department and Customs of a definitive review process.
TrendForce noted that despite car manufacturers heavily reliant on revenue from the American market facing increased pressure, assessing the impact requires considering multiple angles; understanding production locations provides valuable insight into potential consequences. Currently, only Tesla assembles all its vehicles locally, followed by Ford with approximately 76% domestic assembly rate, Honda and Stellantis at around 60%, Subaru, General Motors (GM), and Toyota at about 55%. Hyundai-Kia, Volkswagen Group, Mazda, and Volvo Cars have less than a 40% local manufacturing ratio for vehicles sold in the U.S.
The USMCA agreement establishes requirements regarding regional value content of auto parts, influencing final assembly location choices; cars assembled in the United States, Mexico, or Canada are most likely to meet these criteria. Vehicles compliant with the USMCA can be taxed at a 25% rate only on non-U.S.-sourced components.
TrendForce pointed out that Ford and Honda’s U.S. sales vehicles not only have high domestic assembly rates but also primarily import from Mexico or Canada, focusing efforts to increase American production capacity and parts content. Subaru, GM, and Toyota see approximately 45% imports with significant source differences; GM mainly sources from Mexico while Toyota has a similar ratio of Mexican and Canadian imports compared to Japan's supply, whereas Subaru’s imported vehicles are entirely sourced from Japan.
Car manufacturers lacking high U.S.-assembly rates—such as Hyundai-Kia, Mazda, and Volvo Cars—have production concentrated in South Korea, Japan, and Sweden respectively, without access to the advantageous locations within Mexico or Canada. With 57% of its cars being exported from South Korea, Hyundai and Kia were among the first to propose increased investment in America; shifting operations quickly can help mitigate impacts.
In the short term, car manufacturers will likely increase U.S.-based factory production capacity, prioritizing models with both American and overseas manufacturing bases for a smoother transition. TrendForce stated that tariff-induced instability within the U.S. automotive market is expected to continue until 2026–2027; despite tariffs being confirmed, details remain unclear necessitating ongoing negotiations.
TrendForce noted that despite car manufacturers heavily reliant on revenue from the American market facing increased pressure, assessing the impact requires considering multiple angles; understanding production locations provides valuable insight into potential consequences. Currently, only Tesla assembles all its vehicles locally, followed by Ford with approximately 76% domestic assembly rate, Honda and Stellantis at around 60%, Subaru, General Motors (GM), and Toyota at about 55%. Hyundai-Kia, Volkswagen Group, Mazda, and Volvo Cars have less than a 40% local manufacturing ratio for vehicles sold in the U.S.
The USMCA agreement establishes requirements regarding regional value content of auto parts, influencing final assembly location choices; cars assembled in the United States, Mexico, or Canada are most likely to meet these criteria. Vehicles compliant with the USMCA can be taxed at a 25% rate only on non-U.S.-sourced components.
TrendForce pointed out that Ford and Honda’s U.S. sales vehicles not only have high domestic assembly rates but also primarily import from Mexico or Canada, focusing efforts to increase American production capacity and parts content. Subaru, GM, and Toyota see approximately 45% imports with significant source differences; GM mainly sources from Mexico while Toyota has a similar ratio of Mexican and Canadian imports compared to Japan's supply, whereas Subaru’s imported vehicles are entirely sourced from Japan.
Car manufacturers lacking high U.S.-assembly rates—such as Hyundai-Kia, Mazda, and Volvo Cars—have production concentrated in South Korea, Japan, and Sweden respectively, without access to the advantageous locations within Mexico or Canada. With 57% of its cars being exported from South Korea, Hyundai and Kia were among the first to propose increased investment in America; shifting operations quickly can help mitigate impacts.
In the short term, car manufacturers will likely increase U.S.-based factory production capacity, prioritizing models with both American and overseas manufacturing bases for a smoother transition. TrendForce stated that tariff-induced instability within the U.S. automotive market is expected to continue until 2026–2027; despite tariffs being confirmed, details remain unclear necessitating ongoing negotiations.