Experts Warn 100% American-Built Cars Won't Be Cheap
A car assembly plant. Unsplash

President Donald Trump's ambition to see a 100% American-made car on US roads is facing a harsh economic truth. Automakers are pushing back, warning that his proposed 25% tariff on imported vehicles is forcing them to reconsider production strategies.

Even the most 'American' cars available today, such as the Tesla Model 3 and Jeep Cherokee, only manage about 70% US content. The rest of the components come from Mexico, Canada, Japan, and other global suppliers. That's not just a supply chain issue—it's because the US lacks the raw materials and manufacturing infrastructure needed for fully domestic production.

Why American-Made Cars Won't Come Cheap

Since the Trump administration introduced its 25% tariffs on vehicle imports, carmakers have invested more in US operations and local supply chains. Still, experts say that 100% US production is unrealistic under current conditions.

Martin French, a partner at Berylls Strategy Advisors, told CNBC that even with tariffs, it remains cheaper to source parts globally and assemble vehicles offshore.

The US simply doesn't have enough processing plants for crucial automotive materials such as aluminium, steel, and semiconductors. Even more basic materials like platinum and palladium need significant domestic mining and production efforts. Without new factories and facilities, localising the supply chain is nearly impossible.

That's why no car on the road today is fully American-made. According to New Atlas, even the most domestically built vehicles—Tesla Model 3, Dodge Durango, Honda Ridgeline, and Jeep Grand Cherokee—max out at about 70% US-made.

Take the 2025 Ford Expedition SUV, for example. Although it's assembled by American workers, only 58% of its parts are sourced domestically. Nearly 22% come from Mexico, and the rest are imported from other countries.

Why Full Local Production Would Raise Prices

Automakers argue that shifting 100% of vehicle production to the US would result in sky-high prices that most consumers simply couldn't afford.

'We can move everything to the U.S., but if every Ford is $50,000 (£37,000), we're not going to win as a company,' said Jim Farley, CEO of Ford, in an interview with CNBC.

'That's a balancing act that every [automaker] will have to do, even the most American company,' he added.

If vehicle prices soar, consumer demand could plummet, affecting production volume and possibly triggering job cuts and factory shutdowns.

Can Trump Make American Cars More Affordable?

If the Trump administration wants to make 100% American-made cars a viable and affordable option, it would need to offer incentives or tax credits. One example is the $7,500 electric vehicle (EV) credit, which could offset production costs and boost consumer uptake.

Currently, even reaching 90% US content in a car is considered a stretch. The average price of a new vehicle in the United States sits around $48,000 (£40,000). That's significantly higher than vehicles produced in Mexico (£30,000), Canada (£35,000), and China (£38,000).

Mark Wakefield, a partner at AlixPartners, suggests that a more realistic goal would be aiming for 75% American-made vehicles. He recommends sourcing the remaining 25% from trade partners such as Canada, to avoid pushing manufacturers into economically unsustainable territory.

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