Learning Takeaways — How Trump's Tariffs Impact Automakers Around the World
On Monday, August 11, 2025, the Association of Foreign Press Correspondents in the United States (AFPC-USA) hosted a podcast in partnership with the Hinrich Foundation to discuss how the Trump administration’s tariffs are impacting automakers around the world amid heightened global trade tensions.
The episode was hosted by Paul Beckett, an Assistant Editor at The Wall Street Journal. He spoke to his former WSJ colleague Yuka Hayashi, who is currently the Washington-based Vice President at The Asia Group and a member of the firm’s Japan Practice. The conversation centered around “Tariffs hit some automakers more than others,” her latest Hinrich Foundation research published in coordination with fellow trade experts Tatsuya Sugiyama and Brandy Darling.
This podcast episode was produced in partnership with the Hinrich Foundation. AFPC-USA is solely responsible for the content of this episode. The transcript for this episode can be found HERE.
When asked what prompted this research, Hayashi explained that, as Vice President at the Asia Group’s Japan practice, she works with American and global companies operating in Asia. A conversation with one such client (a multinational outside the auto sector) raised concerns about how Japanese automakers they work with might be affected by President Donald Trump’s auto tariffs. While her team had previously examined the broad economic impact on Japan, they had not analyzed the effects on individual companies. She and colleagues launched a project to study the tariff’s impact on automakers from Japan, South Korea, and Europe.
Hayashi could not say which countries have been hit the hardest by these tariffs, saying her team hasn't yet quantified the exact size of the impact but identifies Japan, South Korea, and Germany as the most affected. These countries have large, globally recognized automakers, and for Japan and South Korea, auto and auto-parts exports account for about one-third of all exports to the U.S. For Germany, the share is around 20%. The auto industry is a vital economic sector in Japan, employing 5.5 million people and representing 2.5% of GDP — potentially up to 10% when indirect effects are included. South Korea shows similar numbers. Leaders from both Japan and South Korea have been vocal in opposing the tariffs, initially pushing for full reversal and later focusing on reducing tariff levels.
Hayashi also noted that the impact varies widely by company. Mitsubishi Motors is among the hardest hit, as it imports 100% of its U.S. sales from Japan, making all its vehicles subject to tariffs. On the opposite end, Tesla builds 100% of its U.S. sales domestically, and Ford manufactures 92% domestically. Among foreign brands, Toyota and Honda produce more than half their U.S. sales in the U.S., with most of the remainder built in Mexico and Canada. Roughly half of vehicles made in those two countries face some tariff, while the rest enter duty-free under the USMCA. For tariffed vehicles from Mexico and Canada, the rate depends on the origin of parts and components. Many have significant U.S.-made content, but auto supply chains are complex because parts often cross multiple borders before final assembly.
Yuka Hayashi
“Some of these cars have a lot of components that are actually made in the US, but these supply chains for autos are incredibly complicated, even for the cars built within North America,” she said. “Some parts are made in the US, some are made in Mexico, some are made in Canada, and they go back and forth. And final products can be made in Mexico or in Canada or in the US. So it's a very, very complicated situation.”
Beckett pointed out that tariffs cannot be calculated simply by the nationality of a car company. “It really depends, not so much on the make of the car, but on where it is manufactured,” he said. Hayashi agreed, noting that supply chains often involve complex cross-border movement.
Beckett then questioned how tariffs can apply when the USMCA (a free trade agreement between Mexico, Canada, and the United States) is meant to create a single North American market. Hayashi explained that the USMCA is essentially a renegotiated NAFTA, designed to integrate the three markets. But “in President Trump’s second term, that notion appears to be changing very rapidly.” She said that the administration has imposed 35% tariffs on Canadian imports and 25% on Mexico, even though the USMCA remains in effect. About 85% of imports from Canada and Mexico still enter duty free, but the U.S. “now does not see these three countries as a single market.” As a result, automakers will need to examine their supply chains “very closely” to find the best solutions in the coming months and years, a task likely to require legal expertise.
Beckett asked whether anyone in Congress has protested that the Trump administration is “trampling on a negotiated and congressionally mandated agreement.” Hayashi responded that some lawmakers have argued that trade agreements must go through Congress, but their objections haven’t “made even a dent” in Trump’s actions. She notes this dynamic existed under former President Joe Biden as well. The U.S. Constitution gives Congress the power to ratify trade deals and set tariffs, but presidents also have authority to impose certain trade measures in times of war or emergency. In recent years, both parties have allowed the executive branch to expand its influence on trade policy, but in Trump’s second term, he has “really, really expanded his authority” and used emergency provisions to craft tariff rules.
Hayashi went on to say that the auto tariff, initially announced at 25%, has been reduced to 15% for major partners like the EU, Japan, and Korea (though in Japan and Korea’s case, the agreement has not yet been implemented). These tariffs are being imposed under Section 232 of U.S. tariff law, justified on “national security” grounds. The administration’s position is that foreign automakers are “flooding the US market with imports” and threatening the domestic auto industry, thus requiring tariffs. She frames this as just one example of the president using emergency-style powers for broader trade policy. Currently, Hayashi said, she is “not aware” of any auto industry challenges, but said litigation has focused on “reciprocal tariffs” where emergency powers are invoked.
In regard to the consumer impact of auto tariffs, Beckett noted that manufacturers might initially absorb costs but would likely pass them to buyers over time. Hayashi agreed, saying “a lot of makers have been really absorbing the shock” so far, but price increases are already visible. She cited Ferrari, which announced a 10% U.S. price hike—about $30,000 on a $300,000 car. Subaru has raised prices by $1,000–$2,000, while Toyota’s increases—$200 for Toyota models and $250 for Lexus—are relatively minor, suggesting Toyota is “really absorbing the impact” itself.
Beckett clarified that Toyota’s smaller price changes weren’t due to smaller tariffs, but to the company taking on more of the cost, which Hayashi confirmed. She added that the longer tariffs remain, the more likely prices will rise across the industry.
Turning to policy, Beckett noted the White House’s stated goal of bringing manufacturing back to the U.S. and asked how Biden’s approach compared to Trump’s. Hayashi said the Biden administration launched two major initiatives affecting foreign manufacturers. The CHIPS Act provided tens of billions in subsidies to attract semiconductor factories, benefiting companies like TSMC and Samsung as well as Intel. The Inflation Reduction Act (IRA) promoted climate policy and electric vehicle adoption by subsidizing EV purchases and battery factory construction, drawing investments from Korean battery makers and Japanese firms like Panasonic.
Beckett then asked what the Biden administration’s policies ultimately meant for the auto sector, and whether Trump’s second-term trade measures had effectively overtaken them. Hayashi explained that Biden’s impact on autos was concentrated in the electric vehicle segment, with companies expanding EV production in the U.S. or elsewhere in North America.
When pressed on whether tariffs could lead to a “golden era” of U.S. auto manufacturing, Hayashi argued they will likely push foreign automakers to increase American production. She stressed, however, that tariffs are only part of the story—the U.S. market itself is a powerful draw: it’s the world’s largest, still growing in population, and backed by a strong economy, unlike countries such as Japan where both demographics and economic momentum are in decline. Japanese companies like Toyota, she noted, have already been expanding U.S. production while keeping domestic output flat or slightly reduced. The same trend applies to Korean and European automakers.
Beckett noted that while other major markets such as India, China, and Brazil might be growing, they present challenges for automakers: lower average car prices and “protectionist” trade regimes even stricter than U.S. tariffs. Hayashi agreed, saying that what foreign automakers produce in the U.S. will be aimed at U.S. consumers, while cars for the rest of the world will be made in cheaper production hubs. She mentioned that while Western companies are pulling back from China, Toyota still uses Japanese factories to serve other Asian markets.
Hayashi warned that U.S. protectionism could prompt other countries to adopt similar policies to protect their own industries, creating a complex web of trade restrictions that will shape corporate production strategies and supply chains.
Turning to labor impacts, Beckett suggested that opening new U.S. plants might come at the expense of jobs in automakers’ home countries. Hayashi replied that Japan, South Korea, and Germany have lobbied hard to limit the effects of U.S. auto tariffs. Japan’s auto sector employs about 5.5 million people, but major investments in U.S. facilities could mean reduced domestic investment. Japan’s workers have already been hit by globalization, with factories closing and jobs shifting abroad. She warned this trend could worsen, harming Japan’s economy and politics. Citing recent elections, Hayashi said a right-wing populist party — drawing lessons from the Trump movement — made surprising gains, winning 15 seats in the upper house, up from just one or two. Declines in high-paying jobs and economic slowdown could fuel such political shifts.
Beckett then shifted to electric vehicles (EVs), noting Trump’s lack of enthusiasm for them aside from a brief promotional moment for Tesla. Hayashi said the tariff’s impact on EVs is unclear. Tesla, which builds its U.S.-sold cars domestically, would be largely insulated from tariffs, although imported parts could still face duties. That could give Tesla a competitive edge. However, she pointed out that tariffs coincide with the Trump administration rolling back consumer incentives for EV purchases, even as 2024 marked a record year for U.S. EV sales. The future, she said, remains “hard to see.”
