As new trade deals are inked and tariffs become a new tool of foreign policy, we’re told this is all in the name of making U.S. carmakers more competitive. “Tariffs gone, doors wide open!” If only competitiveness were that simple. The hard truth is that market access, useful as it is, doesn’t automatically translate into market share.
Vietnam, Indonesia and Japan are three key markets Washington hopes to crack. Yet in all three, U.S. automakers remain stuck on the sidelines. Vietnam is a fast-growing economy and a strategic counterbalance to China, making it both an economic and diplomatic test case for U.S. automakers. Japan is America’s closest ally in Asia, while Indonesia is Southeast Asia’s largest economy, characterized by rising consumer demand, expanding middle classes and developing infrastructure.
Washington points to Vietnam as a victory, with zero tariffs on U.S. autos. Just a few months ago, a typical U.S.-made Ford Territory would face a tariff of over 20%. Now, that tariff is gone. Sounds great until you walk into a showroom.
In Hanoi, a Ford SUV sits under showroom lights at $33,000. Next door, VinFast sells a comparable model for $19,000. Even with zero tariffs, Ford’s cheapest Territory model still costs far above comparable local options. The tariff cut narrows the gap, but does not close it.
There’s more behind the price tag than tariffs. Surveys show Vietnamese customers prize brand reputation. The country’s national champion, VinFast, now commands nearly a third of Vietnam’s auto market. Years of regional supply chain optimization, local production and strong brand recognition give local players a major advantage. Regional powerhouses such as Toyota (14.7%), Hyundai (14.5%) and Honda remain far ahead of U.S. brands. Ford only commands 9.2% of the market.
Even Europe proves the point. Even after the EU-Vietnam trade deal began phasing out tariffs in 2020, German and French automakers haven’t suddenly taken over the market.
The lesson in Vietnam carries over to Indonesia, where U.S. brands also struggle. Indonesia’s homegrown brand, Esemka, stirred national pride, but outsiders dominate the market. The top ten best-selling models all come from Japanese brands: Toyota, Honda, Daihatsu, Mitsubishi and Suzuki so far this year, according to Focus2 Move. Not a single U.S. brand makes the list. Chinese automaker BYD leads Indonesia’s electric vehicle market with a 41.4% share, adding Chinese scale to the competition.
Plus, the Association of Southeast Asian Nations' (ASEAN) internal free trade zone allows regional automakers to move vehicles tariff-free, while U.S. imports arrive at a cost disadvantage before they even hit Jakarta’s port. Trump is pushing countries to sign deals; Europe is also moving quickly. The EU has just finalized its own agreement with Indonesia, which will give European automakers lower tariffs. For Washington, that means a friendly nation in the Asia-Pacific is opening doors wider to European rivals even as U.S. brands continue to struggle.
A Ford Everest SUV costs over $63,000; a VinFast VF e34 electric vehicle (EV) costs barely half that, at $30,700. Cutting the 8% tariff on U.S. vehicles doesn’t make them competitive; it only makes them slightly less uncompetitive. EVs usually cost more upfront, though not in this case, but they’re far cheaper to run: about $0.05 per mile versus $0.13 for gas-powered cars, according to EnergySage.
Japan may be the most challenging market of all, and not because of tariffs, which are already zero. The import market itself is dominated not by Americans but by Europeans. As of this year, Mercedes-Benz leads with 20.9% of new foreign registrations, followed by BMW (14.5%), Volkswagen (13.6%) and Audi (9.4%). Jeep (3.6%) is the lone American name on the leaderboard, selling fewer than one-tenth as many vehicles as top German brands.
Even Japan’s broader import segment is dominated by domestic brands built abroad, leaving little space for outsiders. Honda holds an 11.2% share, Suzuki 10.1% and Nissan 3.1%, while American brands are barely present.
Walking through central Tokyo, you’ll see the problem. Roads are narrow; parking spaces are carved to the centimeter. U.S. vehicles, often large and gas-hungry, don’t fit the streets, the parking lots, or the lifestyle. Tariffs are not the barrier here; product fit is.
That mismatch hits wallets twice: once at the dealership and again at the pump. American cars consume more fuel, resulting in higher fuel bills.
But the barriers don’t end overseas; Washington creates its own. Fifty percent tariffs on steel and aluminum, and 25% tariffs on parts, don’t care what flag sits on the hood. A policy meant to protect U.S. carmakers is also a tax on them. The global automotive supply chain is so deeply integrated that it is nearly impossible to build a car in America without relying on imported components. Those tariffs raise costs on every vehicle assembled in America, whether it is sold domestically or shipped abroad.
Even under the best-case scenario – if U.S. steelmakers filled the gap and prices held steady – American cars would still struggle to compete. But prices rarely stay flat. When prices rise, automakers are forced to choose between absorbing the cost (hurting profits) or raising prices (hurting sales). Either way, competitiveness erodes, leaving less money for crucial research and development – the very thing they need to compete in the long term. Ford and General Motors have already both reported billion-dollar hits to their bottom lines from these new costs.
The real threat is falling behind in innovation. While Washington obsesses over where a car’s steel is sourced, rivals like China are racing ahead. China is building the future: cheaper batteries, mass-market EVs and advances in autonomous driving. Europe is locking in its lead, committing to net-zero by 2050 and banning the sale of new petrol and diesel cars after 2035. Even countries like Vietnam are producing export-ready EVs.
In contrast, the U.S.’ transition to green tech remains stuck in political gridlock, handing rivals a head start that grows every year.
And tomorrow’s buyers don’t care about trade agreements. They want clean, connected, affordable cars. And they’re willing to pay for it. Fifty-eight percent of Gen Z say environmental impact influences their car-buying decisions, according to the GO Banking survey.
Layer nationalism on top, and the hill gets even steeper. Cars are more than products; they are an extension of one's identity. In Vietnam, VinFast is a symbol of national pride. The same is true in Japan, Korea and Indonesia, where regional brands dominate not just because of price, but because of local loyalty.
The more Washington relies on tariffs, the more buyers tend to favor their own brands. Even Tesla, long seen as a standout in U.S. auto exports, saw global sales drop 13.5% in quarter two and plunged 40% in July in the EU, marking its seventh consecutive monthly decline. In Canada, Tesla is experiencing a decline; sales in the country's largest province have dropped 87% year over year.
Tariff cuts open doors, but they don’t make people walk through them. Three questions on value, vision and velocity should be asked at this point. Can U.S. carmakers match the price and quality of regional competitors? Are they investing in EVs, AI and sustainability? Can they innovate faster than the competition? Without competitive pricing, locally relevant products, and strong brands, U.S. automakers will keep losing in the very markets they claim to have “won.”
