North America market analysis
Tariffs and tensions: Trends in North American automotive logistics
From tariffs to tensions, the North American automotive logistics market is grappling with uncertainty and disruption, emphasising the need for resilience.
Since US president Donald Trump announced global tariffs on April 2, 2025 – a day he referred to as "Liberation Day" – the automotive logistics has had to come to terms with uncertainty, and many of the challenges it previously experienced during the Covid-19 pandemic.
"I remember Liberation Day very clearly," Anu Goel, executive vice president, group aftersales and service at VW remarks. "I think that uncertainty still exists today, I think the difference is we have learnt to deal with uncertainty."
He identifies some of the major learnings to come out of the past six months, including the importance of flexibility, urgency and redundancy. "The cost of redundancy today is less than the cost of reacting after the fact in this level of uncertainty," he claims.
Tariffs aren’t the only threat to the region’s automotive supply chains, though. Other headwinds include geopolitical instability – stemming predominantly from the US’ involvement in conflict in the Middle East – as well as competition from China when it comes to cheaper components and vehicles. This concern over competition with China is one that could be easily escalated by trade wars and reciprocal tariffs, as seen with both the US and Mexico introducing tariffs on Chinese vehicles this year.
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Tariff updates
In September, several OEMs responded further to the deepening impacts of tariffs. Nissan announced that it will drop the 2026 Ariya electric SUV from its US lineup, citing 15% tariff imposed on Japanese-built EVs under the US-Japan trade framework as one of the reasons behind this decision. Meanwhile, Hyundai has said it is expanding its US output, boosting capacity in Georgia, and has adjusted its operating profit margin targets downward to account for tariff pressures. The company is also accelerating its plans for its hybrid and EV portfolio in North America. Similarly, Volvo Cars has said it will be accelerating US-based production, committing to produce a new hybrid model in South Carolina by 2030, which one can safely assume is a strategy to reduce exposure to import tariffs.
And within North America, September saw the removal of several counter tariffs put in place by Canada on US imports. This action saw 25% tariffs removed on $44.2 billion worth of goods that had been subject to this rate since March, but – crucially – Canada's counter tariffs on steel, aluminium and automobiles remain in effect “as intensive negotiations with the US continue”. This, the government of Canada says, is in recognition that the US maintains tariffs on these sectors without providing an exemption for USMCA-compliant goods.
In October, Stellantis announced a $13 billion investment plan for expanding its operations in the US. Part of this plan involves reopening its Belvidere Assembly Plant in Illinois to expand production of the Jeep Cherokee and Jeep Compass for the US market. This has led to concern in Canada, as the Jeep Compass is currently manufactured at its Brampton factory in Ontario. In a letter to Stallentis’ CEO Antonio Filosa, Canada’s minister of innovation, science and industry Mélanie Joly expressed “extreme concern with Stellantis’ investment plans in Canada”, calling for the company to “respect its obligations flowing from billions of dollars of financial support extended to [Stellantis] over decades.”
While Joly acknowledges that “the current US tariff environment is creating complex challenges”, she describes the decision to move production of the Jeep compass to the US as “unacceptable” and demands Stellantis work with the government of Canada on a plan that ensures the long-term success of Stellantis, Ontario and all of Canada.
In light of this announcement, Canada’s prime minister Mark Carney has told the press that responding to this with retaliatory trade measures on the US would not be in the best interest of the country. “There’s times to hit back and there’s times to talk, and right now is the time to talk,” Carney said. He claims that – with 85% of its trade with the US being free – Canada starts from a stronger position in its negotiations with the US than all countries but Mexico, and shares his belief that Canada’s trade strategy has to take into the account the needs of a number of strategic sectors to “deliver results” when the US-Mexico-Canada Agreement (USMCA) is reviewed.
Immediate impact of tariff uncertainty
“US [light vehicle] sales have held up exceedingly well, even in the face of all the tariff activity,” Mike Wall, executive director of automotive analysis for S&P Global Mobility, says, noting that sales in the US are up 4%, in comparison to China, where sales are up 6%. He notes that this performance “certainly outpaced” expectations earlier this year, which were more pessimistic.
But who is paying the added cost of the tariffs right now? Wall explains that the exporters are not paying it all, so it is still the automakers that are incurring the costs at the moment. “They're not passing them along directly to the consumer base and, at least as of yet, and it doesn't seem like they're going to either,” Wall shares.
Instead, Wall’s information and intelligence on this matter points towards a “three-layer path” that automakers are following to accommodate or adjust to tariffs. This strategy involves looking at pricing "globally holistically", adjusting pricing across different markets – not focusing universally on the US – and adjusting trim and mix, potentially "de-contenting" and making subtle price adjustments.
Wall notes that the industry’s eyes are fixed on “a step down on those Canada and Mexico tariffs”, but accepts that this may not come until at least the middle of next year, when the official review of the USMCA is set to begin.
The
future of the industry
According to data from Automotive Logistics’ “North American Automotive Logistics Market Report 2026-2036” vehicle production volumes in the region are set to fall to 15.50 million units in 2025, after recovering to near pre-Covid levels in 2023 and 2024. Looking beyond this year, this number is expected to grow to 15.69m units in 2026, increasing to 18.27m units in 2036 with a 1.5% CAGR.
As automotive industry volumes slowly recover, the North American automotive logistics market, valued at $60.88 billion in 2026, to grow – albeit with a modest pace of 3.3% CAGR – to reach $84.44 billion by 2036. However, the report notes that any upside potential for growth will be constrained by unit volume growth.
The markets expected to grow most significantly over the next decade are reverse logistics, set to expand from $0.58 billion in 2026 to $2.05 billion in 2036 with a 13.5% CAGR, and finished vehicle logistics, which is expected to see an increase from $19.62 billion in 2026 to $33.72 billion in 2036, with a 5.6% CAGR.
The report also foresees North American automotive inbound logistics increasing from a market size of $31.62 billion in 2026 to $40.45 billion in 2036, with a 2.5% CAGR, and the premium/priority logistics market slowly growing from $2.74 billion in 2026 to $3.11 billion in 2036, with a modest 1.3% CAGR.
However, the North American automotive aftermarket logistics market will gradually start to diminish, the report forecasts, dropping from $6.32 billion in 2026 to $5.15 billion in 2036 with a -2.0% CAGR.
The road freight market in North America is expected to essentially remain flat with a market size of $16.99 billion in 2026 and remaining at $16.97 billion in 2036, representing a CAGR of 0%. In spite of this stagnation, other modes of transport are predicted to grow fairly significantly. Rail freight as a market is set to grow from $33.98 billion in 2026 to $52.26 billion in 2036 at a CAGR of 4.4%, while an increase in ocean freight is predicted, growing the market from $6.51 billion in 2026 to $10.4 billion in 2036 with a 4.8% CAGR.
Still forecast to grow, but at a slower rate than rail and ocean freight, the North American automotive air freight market looks set to remain a small but important logistics mode with modest growth from $3.54 billion in 2026 to $4.81 billion in 2036 with a 3.1% CAGR.
