American auto executives have had a rough go of it of late. As calendars flipped to 2025, the leaders of the Big Three (GM, Ford, and Stellantis) were already confronting lukewarm demand for their electric vehicles as well as the ascendance of new and formidable Chinese competitors. Then Donald Trump arrived in the White House, and the headwinds turned into hurricane-force gales.
The most urgent issue has been the tariffs that Trump has declared, and then paused, and then resumed on goods imported from Canada and Mexico. Because the North American auto industry is tightly integrated with suppliers in both countries, Trump’s proposed 25% tariffs could increase the cost of new cars in the U.S. by as much as $12,000. On March 6, the Trump administration granted the auto industry a one-month reprieve so that companies can “shift production here to the United States of America,” according to White House press secretary Karoline Leavitt. The likelihood of that happening in a matter of weeks is virtually nil.
Beyond the looming threat of tariffs, U.S. automakers now face an increasingly wobbly domestic market. As Trump’s tumult has rattled the economy (and shaken the stock market), American consumer sentiment has tumbled at the fastest rate in three-and-a-half years.
Both tariffs and an economic downturn would make Americans relatively poorer when contemplating a vehicle purchase. For that reason, their likely effect on car-buying preferences is similar: They would tilt purchase decisions toward cheaper, modest-sized models. But U.S. automakers have no small, affordable options available; after decades focused on building increasingly massive SUVs and pickups, the Big Three no longer offer Americans a single mainstream sedan—only foreign competitors do. Detroit’s devotion to car bloat has left the U.S. auto industry uniquely vulnerable to Trump’s economic chaos.
The term “car bloat” describes the steady expansion of American automobiles. In 1977, just 23% of new car sales were SUVs and pickups; that figure now stands at around 80%. Individual models have also grown larger, such as the Chevrolet Silverado pickup, which added around 700 pounds and two inches of height between 1995 and 2024. Car bloat’s causes are manifold, including shifting consumer preferences, loopholes in federal fuel economy rules, and the billions of marketing dollars carmakers have spent convincing Americans that they need a rugged SUV or pickup even if they haul nothing heavier than groceries and venture nowhere more exotic than a shopping mall.
U.S. car companies now rely on their heftiest models to generate profit. “The pickup truck is the American luxury vehicle,” said Glenn Mercer, a longtime automotive researcher. “That’s where they make all their money.” Last year, GM announced it was ending production of the Chevrolet Malibu, Detroit’s last non-luxury sedan sold in the U.S. .
Meanwhile, the Big Three’s margins have grown juicier due to the supply chains that spread across North America following the 1994 adoption of NAFTA. The elimination of border fees has allowed automakers to capitalize on Mexico’s relatively cheap labor as well as Canada’s abundant raw materials and many factories. A single automotive component can cross national borders as many as seven times during the production process.
Free trade has allowed the automakers to minimize the cost of producing cars that have grown increasingly massive—and expensive. In January, Kelley Blue Book found that the average price of a new vehicle in the U.S. was just shy of $50,000, near an all-time record. Car ownership is even pricier when accounting for the rising costs of insurance and maintenance. According to federal data, the average inflation-adjusted cost of owning a car driven 15,000 miles annually rose a whopping 44% between 2017 and 2023, reaching $12,000 per year.
Even in a rich and auto-dominated country like the U.S., there’s a limit to how much shoppers can fork out. Last year, the Detroit News noted an “affordability shift” in car-buying preferences, and a recent analysis by Wells Fargo found that most American pickup owners want to pay between $40,000 and $50,000 on their next truck, well below the typical cost of $60,000-plus.
A 2024 survey by the Dave Cantin Group and Kaiser Associates found a three-percentage point jump in Americans planning to buy a sedan as their next vehicle—and a decline in those eyeing a truck or SUV, the vehicle types that dominate Detroit. The Big Three’s loss has been Asian car companies’ gain: Companies like Kia, Nissan, and Mitsubishi have seen U.S. sales surge for comparatively cheap sedans like the K4, Sentra, and Mirage. Now Trump’s tariffs could add thousands more dollars to the cost of a North American SUV or truck, a price hike likely to catalyze the American shift toward downsizing. (Sedans produced by foreign brands in North American would be likely to see less of a price hike than Detroit’s hefty SUVS and trucks, and many sedans sold in the U.S. are imported from countries that aren’t current targets of Trump’s tariffs.)Even if Trump ultimately dumps his tariff proposals—a huge “if”—growing fears of a recession, which Trump has refused to rule out, reveal the vulnerability of Detroit’s bloated lineups. Some budget-conscious car buyers may save money by delaying their purchase, choosing fewer features, or selecting a smaller model within the same vehicle class. (This may already be happening: The comparatively modest Toyota RAV4 recently dethroned the Ford F-150 pickup as the top-selling vehicle in the U.S.) The other likely scenario: They could switch from an SUV or pickup to a comparatively cheap sedan.
“In a world of uncertainty, a safe harbor is a lower cost, high quality vehicle,” said Mercer. “That’s the Japanese and Koreans.”
For U.S. automakers, losing longtime customers would be a disaster. “It’s easier to keep a customer than conquer one,” Mercer said. “I’m sure Ford is kicking itself that it discontinued so many of its car lines—and the Koreans and the Japanese are feeling pretty damn smart.”
For Americans not personally involved in the auto industry, a tempering of car bloat would hardly be a bad thing. Bigger vehicles are more deadly and polluting, and a decline in size would reduce crash deaths and emissions. But those societal benefits are unlikely to be top of mind for U.S. automakers facing tumbling sales.
Mercer blames the Big Three for “lemming-like behavior” as they have dropped all of their smaller models over the last 20 years. That culling process has left them vulnerable to the current consumer shift toward affordability, a trend that Trump’s economic chaos will only reinforce. If American auto sales take a hit in the months ahead, carmakers will surely blame whipsawing federal policy. Fair enough, but they should also look in the mirror.
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