As President-elect Donald Trump's potential US tariff policies
loom, S&P Global Mobility has updated its baseline assumptions
for its vehicle forecasts. Along with other global and regional
economic, regulatory and market conditions, we have factored these
new tariff assumptions into our
December 2024 vehicle forecasts.
Anticipated US tariff changes
By mid-2025, S&P Global Mobility expects the US will
implement a universal tariff on goods from outside North America.
We currently assume Canada and Mexico will be exempt from these
tariffs as part of the governing US-Mexico-Canada Agreement
(USMCA), though the Trump transition team has indicated it may
impose a 25% tariff on Canada and Mexico. This could evolve as the
countries review this trade agreement in mid-2026.
A universal tariff would presumably cover all goods, including
autos and auto parts, based on the December 2024 round of S&P
Global Mobility vehicle, production, powertrain and sales
forecasts. Our current assumption is for a universal standard 10%
tariff, up from a typical 2.5%.
We expect that goods from mainland China imported to the US will
see a new 30% tariff (up from 21%), with the existing 102.5% tariff
on electric vehicles from mainland China remaining in place. We
expect this tariff will not be used as a bargaining tool that Trump
would revoke if he obtains other concessions but would instead
become a permanent tariff.
A period of policy uncertainty
Trump has said he will act quickly after he takes office on Jan.
20, 2025. We expect an extended period of heightened policy
uncertainty, which will have real-world impacts on economies. Even
if he does not act on some of the more extreme tariff proposals,
the environment is not likely to be clear and stable.
A heightened period of policy turmoil and uncertainty is
expected for as much as a year, possibly longer. This uncertainty
itself can be as difficult for the automotive industry as the
impact of tariffs when they arrive.
Trump will also likely make changes to US emissions
requirements, and we expect significant reductions in
battery-electric vehicle (BEV) volumes/market share and adjustments
in electrification mix. In 2030, we expect the US BEV mix to reach
about 30%, compared with prior projections for about 40% in that
year.
The December 2024 forecast update reflects a mix of upgrades in
the extreme near-term forecast and significant downgrades for
various regions in the intermediate term. Our downward revisions
for 2025 and 2026 reflect some negative impacts of broader tariff
actions under the incoming Trump administration, along with
shifting market demand and inventory management challenges, among
other factors.
US tariff changes would impact virtually every
country's economy
S&P Global Mobility expects both positive and negative
impacts on the US and global vehicle markets and economies as a
result of Trump's policies. A universal tariff will affect
virtually every country's economy and there are risks associated if
the administration takes this step. However, there is also an
opportunity for the US light-vehicle market to see some
benefits.
Take Europe and Asia, for example. Europe is a major exporter to
the US. Its key manufacturing economies will see the biggest
impact, and this could weaken internal markets across the region.
With European manufacturing already declining, the impact on jobs
and public sentiment could worsen.
Some ASEAN markets have benefited from resourcing out of
mainland China, but expected slower US exports and a slower China
market in the near term could delay auto sales recovery.
Some new policies may provide economic
relief
In the US, we expect several of Trump's policies to provide some
relief. We view proposed income tax breaks and corporate tax cuts
as potentially positive changes.
Specific to the US light-vehicle market, the administration's
expected rollbacks of emissions and fuel economy regulations will
likely reshape the mix of vehicles being offered in the US. The
lowered regulatory requirements will mean vehicles with lower
levels of electrification because of less pressure to move to BEVs
as quickly.
That change should enable automakers to offer more affordable
propulsion solutions, easing pressure on vehicle prices. We
continue to expect growth for BEVs, but with lower penetration in
the medium-term due to eased regulations.
Because of expected lower vehicle prices, we forecast that
medium-term US light-vehicle sales will improve.
The impact of a global light-vehicle sales tariff may
peak in 2026
Because the tariffs would not be in place for all of 2025,
S&P Global Mobility expects global light vehicle sales impacted
more heavily in 2026, with smaller impact in later years. Compared
with our November 2024 forecast, we expect global light-vehicle
sales to decrease by about 793,000 units in 2025, with a peak
impact of 1.05 million units in 2026.
Downside risks of tariffs: Potential trade war,
inflation
A US universal tariff policy could, however, lead to an
aggressive trade war. In that case, it's likely that inflation go
up, while interest rates will not decrease as much as expected.
Countries exporting to the US will see a slowdown in their
manufacturing industries, many of which are already in a slump.
This would affect mainland China, Europe, key Asian export markets
and most emerging markets.
S&P Global Market Intelligence expects the world GDP
forecast for 2025 to be lowered because of these revised
assumptions, with mainland China taking the biggest hit – which
will affect countries exporting to mainland China as well.
Though opportunities for US light-vehicle sales are likely due
to lower vehicle prices from these regulatory changes, we also
expect the US GDP forecast will be lowered for the next three to
four years, compared to our November 2024 economic forecasts. As
the cost of goods increases and the market adjusts, we expect the
US to see higher than previously expected inflation initially, with
interest rates likely to be higher across the forecast than in
earlier projections.
he S&P Global Mobility AutoIntelligence service provides
daily analysis of global automotive news and events. We deliver
timely context and impactful analysis to navigate the fast-moving
industry.
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