Foreign automakers have told Trump administration economic advisors they’ll pull their cheapest models from the U.S. market if the USMCA trade agreement isn’t renewed with meaningful tariff relief for vehicles and parts built in North America. The Wall Street Journal first reported the warnings, which Reuters has not independently verified.
The timing is brutal. The USMCA — the very deal Donald Trump once called “the greatest trade deal ever” when he signed it in 2020 — faces a July 1 renewal deadline. And the man who negotiated it is the same man who slapped 25 percent “national security” tariffs on Canada and Mexico almost immediately after returning to office in 2025.
That contradiction is now threatening to eat the bottom of the American car market alive.
There are exactly four new cars available in the U.S. for under $25,000 right now. Three of them are circling the drain. Nissan is killing the Versa, Kia is axing the Soul, and Hyundai built a second-generation Venue but hasn’t decided whether Americans will even get it.
The affordable new car was already on life support. This could be the plug getting pulled.
The math isn’t complicated. Roughly half the components in vehicles assembled on American soil come from Canada or Mexico. About 45 percent of all cars sold here are imported.
A trade framework that penalizes those supply chains doesn’t just raise sticker prices on new vehicles — it eliminates the ones that working families could actually afford.
Even cars with final assembly inside U.S. borders aren’t safe. If the cost of importing parts stays inflated, automakers say those models become money-losers. Nobody builds cars to lose money, and budget models already run on razor-thin margins.
The downstream effects are predictable and ugly. Without affordable new cars carrying fresh warranties, buyers get pushed into an overheated used market where $10,000 barely buys a crossover with six figures on the odometer. For America’s working poor, an unexpected $2,000 repair bill on a questionable used car isn’t an inconvenience — it’s a job lost, a rent payment missed, a spiral.
A decade ago, you could buy a brand-new Nissan for under $10,000 and drive it reliably for years. That era is gone, and nothing in current trade policy suggests any interest in bringing it back.
Canada, meanwhile, is taking a different approach. It’s begun allowing Chinese automakers to sell vehicles inside its borders on a limited basis — a direct response to affordability pressures. Whether that solves anything long-term is debatable, but it signals how seriously other governments are treating the cost crisis that Washington seems content to deepen.
Consumer sentiment sits near historic lows. Prices across the economy remain elevated. The job market is tightening. And the auto industry — one of the most deeply integrated manufacturing ecosystems in North America — is watching the foundation of its supply chain get treated like a bargaining chip.
The automakers aren’t bluffing. They’ve done this calculus before. When margins disappear, models disappear. The Fiesta, the Fit, the Sonic, the Spark — all gone in the last several years, long before tariffs reached their current levels.
What’s left is a market where the cheapest option keeps getting more expensive, and the people who need affordable transportation the most have the fewest choices.
July 1 isn’t far off. If the USMCA renewal doesn’t deliver real tariff relief, the sub-$25,000 new car in America won’t just be rare. It’ll be extinct.
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