Fluid tariff situation drives updates to S&P Global Mobility vehicle forecasts

Recent US government actions have further complicated the auto tariffs landscape. Effective June 4, 2025, the US increased its tariff on imported steel and aluminum from 25% to 50%, including for derivative articles (this covers parts and components which contain steel and aluminum, versus finished products ready for sale to a consumer).

This tariff applies to imports from all countries except the UK, to allow the US and the UK to finalize a trade agreement framework announced in May. The two countries may develop a quota-based structure; but if talks aren’t resolved, the UK also moves from 25% to 50%.

In addition to increasing the tariff amount, US President Donald Trump changed how the tariffs apply to derivative steel and aluminum articles. As of June 4, non-aluminum, non-steel content of all aluminum and steel articles and derivative articles are subject to the reciprocal tariffs announced on April 2. Those tariffs are under the International Emergency Economic Protection Act (IEEPA); through July 8, they sit at 10% from countries except China, Canada and Mexico. As with prior tariff moves under this Administration, including the earlier 25%, no drawback is available.

The change ensures that 100% of the derivative part sees some form of tariff; previously, the derivative would only have a 25% tariff on steel and aluminum content and the rest of the parts’ value would enter the US non-tariffed. As of June 4, the metals portion sees a 50% tariff, while the non-metal value is tariffed at 10%. The solution is expected to complicate the process, and to result in a higher overall auto tariff than if the derivative part was subject to only the 50% tariff. 

The S&P Global Mobility June 2025 light-vehicle production forecast will reflect the activities since late April through to the increased steel and aluminum Section 232 tariff on June 4, 2025. The late April/early May activity put the auto industry in a somewhat better position than anticipated, though the June 4 metals tariff increase offsets some of the easing.​

While the June automotive industry forecast is still in development, we have provisionally determined that global production is being revised upwards in the range of 750,000 units for 2025 and by a similar level in 2026.​ North American production is being revised upwards in the range of 300,000 for 2025 and 250,000 in 2026​.

This outlook, while still grim, is better than it was with the April 2025 forecast. The situation does remain difficult for determining investment and sourcing decisions, as changes and challenges continue.

On the issue of US and North American production, the sharp curtailing of output–which we initially expected—has not come to fruition yet. Automakers have made some minor sourcing change announcements, most of which will not come into play before late 2026 or 2027, while they have largely adopted a ‘wait-and-see’ approach relative to adjusting North American production as immediate reaction.

The potential supply chain disruption from Chinese export restrictions of rare earth materials is not a factor in this forecast round. There is insufficient information to predict which automakers will be affected, when they will be affected, or how they will manage the disruption within their global production footprint.