Tariffs Took the Wheel in 2025

Canada, long the biggest buyer of US-made vehicles, is experiencing a US tariff whiplash. Unlike Americans, most Canadians didn't trade down in price, or compromise on the vehicle choice or features. Rather, their reaction was to accelerate their purchase timing. The 2025 Ipsos New Vehicle Customer Study (NVCS)ii tracked Canadian customers’ reaction to the tariff threat, finding that half (50%) moved up their purchase decision timing, opting not to wait to see where pricing will land.

Like US consumers, Canadian shoppers also said “where it’s built” now matters more. That favours brands with Canadian plants, while big investment decisions – like what to build at Stellantis’ Brampton, Ontario facility – hang on trade clarity heading into the 2026 North American trade deal review.

Mexico is moving to raise tariffs – potentially up to 50% – on vehicles and parts from countries without free trade agreements, largely targeting imports from China (and some from India, Thailand, and other markets). That would reshape prices and sourcing in Mexico, pressuring brands that rely on models built in China and pushing everyone toward more local manufacturing. Many brands manufacturing in China and exporting to Mexico have protested, but some Chinese brands are doubling down with plans to localise and support customers on the ground. This is yet another example of the rippling impact of tariffs, with countries like Indonesia seeking trade pacts to keep market access alive.

In Europe, the US and EU agreed to lower auto tariffs to 15% for many goods, offering partial relief to all the markets in the region. Notably, German consumers appear to be less likely to rush decisions or dramatically change plans, reflecting confidence in their market's stability through EU trade arrangements. In the German market findings from the 2025 Ipsos Navigator Study, a little more than a third (37%) of Germans would rush to buy before price increases and just 33% would postpone purchases. However, German buyers are displaying a willingness to adjust their expectations with half (52%) favouring a domestic vehicle, 42% saying they would accept less expensive models, 36% willing to sacrifice features while a quarter (27%) would consider a used vehicle, all in the face of the cost impacts of tariffs.

In China, consumers show the most decisive response to tariffs. The 2025 Ipsos Navigator Study findings among Chinese consumers show a striking 66% plan to buy before prices increase while 66% also say they will pivot to domestically manufactured vehicles. Further, Chinese buyers strongly prefer to still buy new with only 20% likely to consider a used vehicle, though they would be more open to accepting fewer features (42%) or a less expensive model (43%).

China’s direct exposure to US buyers remains small, but its global push is accelerating. Producing more vehicles than its home market can absorb – especially new-energy models – Chinese automakers are targeting Latin America, Southeast Asia, the Middle East, and Europe, exploring local factories to get around tariffs – echoing the playbook Japan and Korea used decades ago, but with more electrified models.

Japan has committed to invest $550 billion in strategic US sectors and agreed to recognise American automotive standards and lift restrictions on American car and truck imports. In return, the US has agreed to a 15% tariff on most imports from Japan.

South Korea has agreed to an estimated $350 billion in US-focused investments as well as other partnerships and alliances. In exchange, the US has agreed to lower tariffs on South Korean goods including a reduction of automotive tariffs from 25% down to 15%.