The U.S. trade imbalance when it comes to vehicles runs deeper than tariffs alone, according to a new report that also points to domestic automakers catering to the big-is-better preferences of their home market.

The Jato Dynamics analysis shows 39% of new light vehicles sold in the U.S. last year were imported, the greatest volume of any developed market. By contrast, the European Union imported just 26% of its new vehicles, South Korea 20% and Japan 8%.

The large divide is due in part to the foreign brands’ lineups appealing to wider ranges of tastes while U.S. automakers have leaned heavily toward the large SUVs and pickups that have filled up American garages and roads.

“American carmakers have increasingly adjusted their operations to cater for domestic demand, but this has come at the expense of success in international markets,” said Jato Global Analyst Felipe Munoz in the report.

Taking the European market alone, 2024 imports to the U.S. of European-made vehicles totaled 821,000 units, according to the report, while the EU imported just 188,000 American-made vehicles. 

European automotive consumers also buy SUVs but not the oversize ones that have become common in the U.S. The large SUVs comprised 21% of new SUV sales in the U.S. last year, while they made up just 2% of SUV sales in the EU, Jato reported.         

“Pick-up trucks and large SUVs, in which American carmakers have largely specialised, 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.”

In fact, Ford and General Motors have consequently scaled back overseas operations, compounding the trade imbalance, while European automakers have diversified their offerings to appeal to a broader consumer base, Jato said. 

Tesla has been the U.S. automaker exception when it comes to international consumer appeal, the report indicates, though demand for its vehicles has also recently fallen after backlash against leading shareholder Elon Musk’s work for the Trump administration.

“Without a concerted effort by U.S. manufacturers to develop truly global products that align with regulatory requirements and market-specific preferences, this imbalance is likely to persist,” Munoz said.

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