A persistent trade imbalance between the United States and the European Union in the automotive sector is being driven by deeper structural issues than tariffs alone, according to a new report from JATO Dynamics.
As US President Donald Trump renews criticism over the lack of American-made cars on European roads, new analysis reveals that the issue stems from limited global appeal of US vehicles and a domestic market increasingly reliant on imports.
The report, Understanding the Automotive Trade Imbalance Between the US and Europe, outlines how just 61% of the 16.09 million new vehicles sold in the US in 2024 were produced locally — the highest import share among developed markets.
In contrast, imported vehicles made up only 26% of new registrations in the EU, 20% in South Korea, and just 7.8% in Japan.
In 2024, the US imported over 821,000 vehicles from the EU, while only 188,100 American-made cars went the other way — a trade deficit of more than four to one.
“Much of the discussion has centred on tariffs, but this imbalance reflects decades of structural, regulatory, and consumer preference divergence,” said Felipe Munoz, global analyst at JATO Dynamics.
Until recently, EU tariffs on US-made cars stood at 10%, compared with a 2.5% tariff on EU vehicles entering the US.
While tariffs contribute to the disparity, the report emphasises that the limited international appeal of US vehicle offerings – with the notable exception of Tesla – is a more critical factor.
US carmakers have increasingly focused on large SUVs and pick-up trucks tailored to domestic demand, narrowing their relevance in export markets.
In 2024, US consumers bought nearly 3 million pick-up trucks, compared to just 156,300 sold in the EU. And while SUVs made up more than half of the passenger car market in both regions, 21% of SUVs in the US exceeded five metres in length, compared with just 2.4% in Europe.
“These vehicles, while highly profitable for US giants like General Motors and Ford, have minimal appeal internationally,” Munoz said. “This has become a double-edged sword -driving profits at home but stifling overseas growth.”
This over-reliance on the domestic market has led US automakers to scale back their international operations, deepening the trade imbalance.
In contrast, European brands have diversified their portfolios, creating vehicles that align with a wider range of market and regulatory demands, enabling them to succeed in the US and beyond.
The report concludes that unless US manufacturers make a strategic shift toward developing globally competitive models, the imbalance will remain – regardless of changes to tariffs or trade policy.
“Without a concerted effort to produce truly global vehicles, American manufacturers will struggle to gain a meaningful foothold in export markets,” Munoz warned.