JATO Dynamics Report Explores U.S. and EU Automotive Trade Imbalance

A new report from JATO Dynamics, “Understanding the automotive trade imbalance between the U.S. and Europe,” explores the root causes behind the imbalance in automotive trade flows between the two markets. 

JATO Dynamics has provided data and analysis for the industry for more than 40 years. Its report attests the trade imbalance is the result of a combination of factors beyond tariffs. Until April, EU tariffs on imported vehicles from the U.S. stood at 10%, while the reciprocal tariff on imports of American-made vehicles to Europe were 2.5%. 

“Recent analysis and commentary on this topic have focused on the disparity between the respective tariffs imposed by these two markets on the other,” said Felipe Munoz, global analyst at JATO Dynamics. "Yet this imbalance runs far deeper, resulting from decades of evolving structural, cultural, and regulatory dynamics.”  

Of the 16.09 million new light vehicles sold in the US in 2024, 61% were produced locally. The remaining 39% were imported, making its import share the highest among developed markets. By comparison, imports accounted for just 26% of new vehicle registrations in the EU, 20% in Korea, and only 7.8% in Japan. 

In addition to the U.S.’ relative reliance on imports, its carmakers’ collective inability to offer products with genuine international appeal – except for Tesla – is a significant contributing factor to its trade imbalance with Europe. In 2024, imports of EU-manufactured vehicles to the US totaled more than 821,000, while exports of American-made cars to the EU lagged at just 188,100 units, a deficit of more than four to one. 

“One of the main factors that sets the US apart from other markets is the preference among consumers for larger vehicles,” Munoz said. “American carmakers have increasingly adjusted their operations to cater for domestic demand, but this has come at the expense of success in international markets.” 

While SUVs enjoy similar levels of popularity in the EU and U.S., accounting for 52% and 57% of the new passenger vehicle market in 2024, the gap widens significantly for large SUVs more than five meters in length. These vehicles accounted for 21% of all SUVs in the U.S., but represented only 2.4% of the segment in the EU. Comparably, 2.95 million pick-up trucks were sold in the U.S. and just 156,300 in the EU.

“Pick-up trucks and large SUVs, in which American carmakers have largely specialized, have been a double-edged sword,” Munoz said. “While they have been a major source of profitability for America’s two largest automakers – General Motors and Ford – demand for these vehicles in other markets does not exist on the same scale as in the U.S.” 

Due to the lack of popularity of the vehicles overseas, both automakers are scaling back their overseas operations and reinforcing their dependence on the domestic market and contributing further to the trade imbalance. 

European manufacturers diversified their portfolios and tailored products to a broader range of international preferences, enabling them to penetrate the U.S. and other markets more effectively. Munoz said that U.S. manufacturers must develop products that align with EU regulatory requirements and market-specific preferences or the trade imbalance will continue to exist.

For more information about JATO Dynamics and its research, visit its website here.