This move could occur if the United States-Mexico-Canada Agreement (USMCA) is not renewed or its effectiveness is diminished, the Wall Street Journal reported on 27/4.

President Trump's economic advisors have been informed that some foreign automakers might be unable to produce and sell lower-priced vehicles to the US market if the USMCA ceases to exist or if a renewed version does not significantly reduce tariffs on North American-made cars and parts.

The automotive industry has urged the Trump administration to extend the USMCA, an agreement scheduled for review this year. Automakers describe this trade deal as vital for the US automotive manufacturing sector.

The Kia K4 (left) and Nissan Sentra are two of the cheapest new car models available in the US. Photo: Car and Driver, Nissan

Mexico and Canada are placing high hopes on the USMCA negotiations as a means to alleviate the burden of high tariffs imposed by President Trump in 2025. These tariffs have created difficulties for automakers and other industries within the integrated North American economy.

In 2025, the US president imposed 25% tariffs on car exports from Mexico and Canada, compared to 0% under the USMCA, an agreement he initiated in 2020, calling it the "greatest trade deal ever".

The three countries anticipate finalizing the trade agreement negotiations by 1/7, but progress has been complicated by tensions between the US and Canada concerning tariffs.

For brands such as Nissan, Hyundai, Toyota, and Honda, lower-priced cars heavily rely on supply chains spanning all three nations. This reliance extends beyond foreign manufacturers; even domestic producers are significantly affected by cross-border supply chains.

Detroit automakers have largely ceased producing small cars in recent years, ceding the affordable market segment to foreign brands. Models like the Toyota Corolla, Honda Civic, Nissan Sentra, and Hyundai Venue now dominate this market share. Many of these vehicles are assembled in the US or Mexico but utilize components that are permitted to move freely across borders under current regulations. Eight of the 10 cheapest new car models sold in the US originate from foreign automakers.

The average price of a new car in the US is approximately 50,000 USD. The few vehicles still starting under 20,000 USD are often the last resort for buyers with tight budgets.

Automakers argue that without a stable, tariff-free framework across North America, manufacturing these cars in the US is simply not financially viable. Labor costs, raw material prices, and existing investments in cross-border production all hinder a shift in manufacturing. Rather than debating the financial implications, some automakers may simply discontinue certain models or versions. My Anh