Automotive trade between the US and the EU has been unbalanced in recent years, and there are reasons for this.
JATO Dynamics has just published its latest study on the reasons why most American cars are unpopular in Europe. According to the white paper, a new wave of US protectionism could drastically reshape the global auto industry as the US attempts to correct a persistent trade imbalance with the EU in the vehicle sector.
The document, titled “Understanding the US-Europe Trade Imbalance,” analyzes the causes of the imbalance in automotive trade between the two markets. It shows that this trade imbalance is not solely due to tariffs. Until April, EU tariffs on cars imported from the US amounted to 10%, while the US tariffs on European cars were only 2.5%.
Historic imbalance between the US and Europe
However, the imbalance is much deeper and the result of decades of structural, cultural and regulatory developments.
In 2024, less than two-thirds (61%) of the 16.09 million new light vehicles sold in the United States were produced locally. The remaining 39% were imported, making the share of imports the highest among developed markets. By comparison, imports account for only 26% of new vehicle registrations in the EU, 20% in Korea, and just 7.8% in Japan.
In addition to the heavy dependence on imports, another key factor in the trade imbalance with Europe is the inability of American automakers—with the exception of Tesla—to offer products with genuine international appeal. In 2024, sales of EU-produced vehicles in the US exceeded 821,000 units, while registrations of American cars in Europe stagnated at 188,100 units: a ratio of over 4 to 1.
The reasons for this US dependence on car imports
Why is this so? According to the study, one of the main reasons is American consumers’ preference for large vehicles. As a result, US manufacturers have increasingly geared their production to domestic demand, but this has hampered their success in international markets.
Although SUVs are popular in both the EU and the US, accounting for 52% and 57% of new registrations, respectively, in 2024, differences emerge for large SUVs (over five meters in length). In the US, they account for 21% of SUVs sold, compared to just 2.4% in the EU. Also in 2024, 2.95 million pickup trucks were sold in the US, compared to just 156,300 in Europe.
Large SUVs and pickup trucks are almost exclusively popular in America
American drivers love pickup trucks and large SUVs. As a result, US manufacturers have specialized in these vehicles, but this has proven to be a double-edged sword. Despite their significant profitability for General Motors and Ford , demand for these vehicles in foreign markets is far more limited.
The limited global appeal of these vehicles has led both companies to reduce their foreign operations, increasing their dependence on the domestic market and further exacerbating the trade imbalance. In contrast, European manufacturers have diversified their offerings and adapted their products to a wider range of international preferences, allowing them to gain a more effective foothold in the US and other markets.
Source: Motor1
