Debate about expensive cars in the U.S. mostly revolves around Fed rates and labor costs, but one of the key variables is much less visible: the USMCA agreement and tariffs on cars from Canada and Mexico. That framework is now hanging in the air — and foreign automakers, according to the WSJ, are warning the Trump administration that if the USMCA is not renewed, or if tariffs on vehicles and parts from North America are not significantly eased, they will pull their cheapest models from the U.S. market because it will simply stop making economic sense.

Today USMCA allows cars to be assembled in Mexico or Canada and, thanks to the rules of origin, sold in the U.S. without crippling tariffs. Once that bridge falls, the cheapest car segment will suffer the most — which has already been disappearing from the lineup after waves of tariffs and rising costs: the share of new cars under $30,000 has dropped in a few years from just under 40% to roughly 14% of the market. Without USMCA or an alternative regime, a "normal" new car could become even less attainable for the American middle class, because those cheapest models will no longer make economic sense to produce and import.

The most vulnerable are primarily:

- Japanese and Korean manufacturers, who today extensively use Mexico for lower-cost models (Toyota $TM, Honda, Nissan, Hyundai, Kia) – from small sedans to cheaper crossovers.

- some European brands that use North American assembly plants to keep more affordable models (Volkswagen $VWAGY, some Stellantis models $STLA – Fiat/Jeep/Dodge, and possibly cheaper BMW $BMW.DE/Mercedes $MBG.DE from Mexico); VW and Stellantis have already warned that higher tariffs and stricter USMCA conditions are forcing them to rethink what they will offer in the U.S.