US tariffs, auto trade and the limits of the ‘Yank Tank'

The US does not export a significant quantity of passenger vehicles to the UK or Europe. It has never done so, nor indeed, is it likely to.
The reason is simply that American passenger vehicles – or domestic iron as they are often lovingly known are, with very few exceptions, just that. Domestic. Moreover, the bulk of US production comprises of large to extremely large pick-up trucks and SUV's, which are designed and manufactured for domestic consumption and ill-suited to European roads.
For example, let's take on-street city parking. Imagine driving a supersized US pick-up or SUV on a dark and damp November evening in London, frantically searching for a parking spot on an Edwardian terraced street lined to capacity with compact hatchbacks, a sprinkling of stylish coupes, saloon cars and mid-size SUVs. Near impossible to find anything remotely suitable on a road whose infrastructure was mainly conceived and built by Victorian engineers in the 19th century.
What about accessing multistorey car parks? Forget about it, height restrictions and manoeuvrability, too low and too small. Furthermore, the overall aesthetics of American cars do not conform to European design principles. The sheer bulk of these vehicles, coupled with their 'gas-guzzling' V6 and V8 engines, make them wholly inappropriate and thoroughly unappealing to the overwhelming majority of European consumers.
America's best-selling vehicle is the Ford F-Series pickup truck. The brand's entry-level model is the F150 and, by US standards, is fitted with a small 2.7 litre V6 which delivers 19 mpg on the urban cycle. The standard fuel tank holds 23 gallons. Customers can, if they so wish, opt for the larger 26-gallon tank or indeed go the whole hog and select Ford's 5.2 litre supercharged V8. Need I say more? And crucially, we come to gas prices for US consumers – petrol on this side of the pond. While considered high in the US at circa $3.64 (equivalent to £3.12/3.62 € per imperial gallon), they are a real bargain when compared to pump prices in the UK and Europe, currently around $8.70 or £6.90/8.04 € per gallon. I rest my case.
By contrast, the appetite for European vehicles among American consumers has always been strong and remains so, driven by factors such as design, performance, quality and of course, status. This imbalance in trade highlights a fundamental issue: if the US aims to achieve a trade balance in the automotive sector, it must first produce vehicles that are attractive to European consumers, rather than simply penalising the European auto industry for manufacturing cars that American consumers want to buy. Slapping a 25% tax on European cars will not make Europeans buy American iron but simply deprive Americans of choice. Consumers in 'the land of the free and the home of the brave' simply love choice, be it in which car they drive or which size bottle of tomato ketchup they buy.
Notwithstanding the above, the recent implementation of a 25% tariff on all vehicles imported from the UK and Europe to the US has sent shockwaves through the automotive industry, creating a complex and challenging situation for Original Equipment Manufacturers (OEMs), National Sales Companies (NSCs), importers, franchised dealer networks and ultimately, American consumers. This drastic measure has far-reaching consequences that are only beginning to unfold, with the first major announcement coming from Jaguar Land Rover (JLR) in the UK.
JLR's decision to halt all shipments of cars to the US for four weeks, effective Monday, 7 April 2025, marks the beginning of what is likely to be a series of strategic moves by European automakers. This pause in operations will provide JLR, in collaboration with JLR USA and their franchisees, the necessary time to strategise on how best to mitigate considerable increases in sticker prices while balancing OEM, distributor, and dealer profit margins. This delicate balancing act is crucial for maintaining competitiveness in the US market whilst simultaneously absorbing the impact of the tariff.
As news of JLR's decision spreads, all eyes are now on other major European manufacturers whose products are highly sought after in the American market. Companies such as Volkswagen Group, Mercedes-Benz, and BMW are undoubtedly engaged in intense deliberations to address this monumental challenge. In the coming days, we can expect a flurry of press releases from their respective headquarters in Wolfsburg, Ingolstadt, Stuttgart, and Munich, outlining their respective strategies to tackle the tariff issue.
Madox Square LLP collaborates across the industry. Moreover, over the past days, I have been speaking with executives across Europe and the US, it is clear that the atmosphere remains febrile. The task of finding a satisfactory solution is fraught with difficulties, requiring a delicate balance between maintaining market share, preserving profitability and minimising the impact on consumers. Industry leaders emphasise the importance of keeping a level head and not allowing the emotional aspects of the situation to cloud judgment or decision-making processes.
It is important to note that these manufacturer-specific responses will be independent of any retaliatory actions that the European Union may decide to impose. The potential for escalating trade tensions between the US and Europe adds another layer of complexity to an already volatile situation.
The imposition of the 25% automotive blanket tariff also raises questions about the long-term strategy of the US government in addressing trade imbalances. A trade war is unlikely to be the path to prosperity for the US – in fact, many industry experts believe it could have the opposite effect. By artificially inflating the prices of popular European vehicles, the tariff may lead to decreased sales, job losses in the distribution and retail sectors and reduced consumer choice. Furthermore, John Murphy, Managing Director at Bank of America, said the increased cost from tariffs could reduce US car sales by up to 3 million units. This number represents a reduction of 20% of sales on the 15.9m vehicles sold in 2024.
Ultimately, the tariff could very well have unintended consequences for the US automotive industry. American manufacturers who rely on imported vehicles will undoubtedly face increased costs and complications in their supply chains. In turn, higher component costs will lead to increased prices for domestically produced vehicles as 40% to 60% of components rely on the global supply chain, thus creating a ripple effect throughout the entire automotive market.
Paul Bennett, Senior Partner at Madox Square LLP.
"US tariffs, auto trade and the limits of the 'Yank Tank'" was originally created and published by Motor Finance Online, a GlobalData owned brand.
The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Newsweek

34 minutes ago

• Newsweek

IndyCar Unveils the 2028 Race Car

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. IndyCar announced the new car for the 2028 season, which will be ready for testing in 2026. The American racing series revealed the new race car while at the Road America track ahead of the XPEL Grand Prix. Dallara is producing the new chassis for the car, continuing as the exclusive chassis for IndyCar as it has since 2008. The series officials plan on the new design improving the racing throughout all four track types and pushing the car's development further. "The time has come for a new NTT INDYCAR SERIES chassis," INDYCAR President Douglas Boles said in a statement. "The DW12 served the series so well, as it provided a combination of phenomenal, wheel-to-wheel racing and critical enhancements to safety. "But recent significant updates to the car - from the aeroscreen to the hybrid power unit - have helped advance the need for a completely new car. "We are pleased by what our engineers and Dallara have collaboratively designed and believe it will appeal to the fans and paddock while also upholding our standards of safety and enhancing INDYCAR's on-track competition well into the future." The 2028 car features a projected weight of 85-100 pounds compared to the current model. The engine is going to become a 2.4-liter twin-turbocharged V-6 internal combustion engine, which should be more powerful. Scott McLaughlin, driver of the #3 Dex imaging Team Penske Chevrolet drives during the NTT INDYCAR Firestone Grand Prix of St. Petersburg on March 02, 2025 in St Petersburg, Florida. Scott McLaughlin, driver of the #3 Dex imaging Team Penske Chevrolet drives during the NTT INDYCAR Firestone Grand Prix of St. Petersburg on March 02, 2025 in St Petersburg, Florida. Photo by Miguel will create the power supply as it has since 2000. They designed the engine to be 25 pounds lighter and to use more electrical power. The new model is still not set, as the designers and engineers are still rounding out the rough edges of the design. IndyCar stated that further details and renderings of the design are yet to come. It is unclear when the timeline for its unveiling will. While the features and promise of the new car sound nice, there is still much to be learned from testing to see if it can deliver better racing than the current generation of cars. IndyCar's European competitor, Formula 1, introduced a new set of regulations in 2022, which promised better racing, but the cars are creating more dirty air than ever, making it harder for cars to follow others. If they manage to develop a meaningful improvement over the current car that races better across the different tracks, the series' unique tracks could shine more, setting it apart from any other motorsport in the world and continuing to compete with F1.

Boston Globe

39 minutes ago

• Boston Globe

Here's how Iran could retaliate after US strikes on its nuclear program

Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Ever since Israel started the war with a surprise bombardment of Iran's military and nuclear sites on June 13, Iranian officials from the supreme leader on down have warned the U.S. to stay out, saying it would have dire consequences for the entire region. Advertisement It should soon be clear whether those were empty threats or a grim forecast. Here's a look at what Iran's next move might be. Targeting the Strait of Hormuz The Strait of Hormuz is the narrow mouth of the Persian Gulf, through which some 20% of all oil traded globally passes, and at its narrowest point it is just 33 kilometers (21 miles) wide. Any disruption there could send oil prices soaring worldwide and hit American pocketbooks. Advertisement Iran boasts a fleet of fast-attack boats and thousands of naval mines that could potentially make the strait impassable, at least for a time. It could also fire missiles from its long Persian Gulf shore, as its allies, Yemen's Houthi rebels, have done in the Red Sea. The U.S., with its 5th Fleet stationed in nearby Bahrain, has long pledged to uphold freedom of navigation in the strait and would respond with far superior forces. But even a relatively brief firefight could paralyze shipping traffic and spook investors, causing oil prices to spike and generating international pressure for a ceasefire. Attacking US bases and allies in the region The U.S. has tens of thousands of troops stationed in the region, including at permanent bases in Kuwait, Bahrain, Qatar and the United Arab Emirates, Arab Gulf countries just across the Persian Gulf from Iran — and much closer than Israel. Those bases boast the same kinds of sophisticated air defenses as Israel, but would have much less warning time before waves of missiles or swarms of armed drones. And even Israel, which is several hundred kilometers (miles) further away, has been unable to stop all of the incoming fire. Iran could also choose to attack key oil and gas facilities in those countries with the goal of exacting a higher price for U.S. involvement in the war. A drone attack on two major oil sites in Saudi Arabia in 2019 — claimed by the Houthis but widely blamed on Iran — briefly cut the kingdom's oil production in half. Activating regional allies Iran's so-called Axis of Resistance — a network of militant groups across the Middle East, is a shadow of what it was before the war ignited by Hamas' Oct. 7, 2023, attack on Israel out of the Gaza Strip — but it still has some formidable capabilities. Advertisement Israel's 20-month war in Gaza has severely diminished the Palestinian Hamas and Islamic Jihad groups, and Israel mauled Lebanon's Hezbollah last fall, killing most of its top leadership and devastating much of southern Lebanon, making its involvement unlikely. But Iran could still call on the Houthis, who had threatened to resume their attacks in the Red Sea if the U.S. entered the war, and allied militias in Iraq. Both have drone and missile capabilities that would allow them to target the United States and its allies. Iran could also seek to respond through militant attacks further afield, as it is widely accused of doing in the 1990s with an attack on a Jewish community center in Argentina that was blamed on Tehran and Hezbollah. A sprint toward nuclear arms It could be days or weeks before the full impact of the U.S. strikes on Iran's nuclear sites is known. But experts have long warned that even joint U.S. and Israeli strikes would only delay Iran's ability to develop a weapon, not eliminate it. That's because Iran has dispersed its program across the country to several sites, including hardened, underground facilities. Iran would likely struggle to repair or reconstitute its nuclear program while Israeli and U.S. warplanes are circling overhead. But it could still decide to fully end its cooperation with the International Atomic Energy Agency and abandon the the Nuclear Nonproliferation Treaty. North Korea announced its withdrawal from the treaty in 2003 and tested a nuclear weapon three years later, but it had the freedom to develop its program without punishing airstrikes. Advertisement Iran insists its program is peaceful, though it is the only non-nuclear-armed state to enrich uranium up to 60%, a short, technical step away from weapons-grade levels of 90%. U.S. intelligence agencies and the IAEA assess Iran hasn't had an organized military nuclear program since 2003. Israel is widely believed to be the only nuclear-armed state in the Middle East but does not acknowledge having such weapons. Gambrell reported from Dubai, United Arab Emirates.

Miami Herald

an hour ago

• Miami Herald

What If Ford Revived The Flex As A Maverick-Based Compact 7-Seater?

Years ago, Ford offered the Flex–a unique, box-shaped seven-seater that was either a station wagon, an SUV, or a minivan, depending on who you asked. Sharing its platform with the Ford Taurus, the Flex offered buyers an affordable option for a seven-seater family car that wasn't a massive, gas-guzzling, body-on-frame off-roader. Despite occupying a niche segment, the Ford Flex proved to be relatively popular, selling over 300,000 units during its 11-year production run. Even with consistent year-over-year sales figures, Ford decided to discontinue the full-size crossover after its 2019 model year with no direct replacement. These days, it's incredibly difficult to find a seven-seater vehicle capable of hauling a large family, along with their luggage and some trinkets, that isn't either an expensive, less-than-attractive minivan or a gargantuan SUV. One example that does spring to mind is the Mercedes-Benz GLB-Class, which offers the seating capacity and aesthetics of the much larger GLS-Class, without the massive proportions and eye-watering price tag. If Ford were to revive the Flex, perhaps taking on a similar approach to the GLB-Class could be a fitting, modern take on the original Flex. By downsizing the model and optimizing the Ford Maverick compact pickup truck platform to accommodate a third row of seating, Ford could offer North American buyers a budget-friendly alternative to the more luxurious and more pricey Mercedes-Benz GLB-Class. Perhaps a performance variant akin to the Mercedes-AMG GLB 35, based on the Ford Maverick Lobo street truck, could make an appearance in the Ford Flex model lineup as well. Considering the Ford Maverick is roughly 2 feet longer than the Bronco Sport it shares its platform with, the Maverick offers an excellent foundation for a compact seven-seater SUV. The third row of seats could sit where the pickup truck bed would otherwise be found, with the ability to stow them away for bountiful cargo space. Keeping things frugal, the revived Ford Flex could share the same powertrain options as the Maverick pickup, including a 191-horsepower 2.5-liter hybrid four-cylinder engine. For buyers who want a bit more pep in their step and the added confidence of all-wheel drive, the 2.0-liter EcoBoost four-cylinder that produces 250 horsepower and 277 lb-ft of torque could make for an excellent optional upgrade. Trim levels could mirror those of the Maverick as well, including a sub-$30,000 base model XL trim, the mid-level XLT trim, and the well-equipped Lariat. For those who desire a bit more uniqueness, the Lobo package could offer a standard EcoBoost engine, sport-tuned suspension, tweaked steering and brakes, and cosmetic enhancements such as rally-inspired 19-inch alloy wheels and a unique grille, just like the Ford Maverick Lobo. A premium, off-road-focused Tremor package could pair the same standard 2.0-liter EcoBoost engine with an off-road-tuned suspension, a locking rear differential pulled from the Bronco Sport Badlands, and chunkier all-terrain tires. Compact yet spacious 7-seaters have come and gone from the North American market. Examples such as the Mazda5, the seven-seater variant of the Volkswagen Tiguan, and the Mercedes-Benz GLB-Class have offered plenty of families all the seating they need in a vehicle without the unnecessary cost and burden of a much larger SUV. For some reason, however, many of these vehicles seem to have disappeared from the North American market altogether. Now, the resurgence of compact pickup trucks that blend basic utility with compact convenience may offer manufacturers the opportunity to create family-focused variants that leverage their longer wheelbases compared to their crossover SUV alternatives. Based on the foundations of the Maverick pickup truck, a revived Ford Flex could serve as Ford's entry-level seven-seater family crossover. With frugal hybrid powertrains, street performance variants, and an off-road-focused Tremor package, an updated Ford Flex would surely earn its keep within Ford's model lineup in no time. Although this idea is purely hypothetical for now, it wouldn't surprise us if Ford decided to create new models using the same platform shared between the Maverick, the Bronco Sport, and the Escape, that are purpose-built to attract more specific buyers, such as families looking for affordable seven-seater utility, or perhaps even a small delivery van. For the time being, though, families looking for a smaller way to get their hands on three rows of seating will have to look towards the capable and practical Mercedes-Benz GLB-Class. Copyright 2025 The Arena Group, Inc. All Rights Reserved.