Trump wants benefits for those who purchase cars 'made in America.' None fully are
During his address to Congress Tuesday, President Donald Trump said he wants to make interest payments on loans for vehicles made in America tax deductible, but experts are unclear which cars that policy would apply to since all automakers rely on parts from outside the U.S.
"I also want to make interest payments on car loans tax deductible, but only if the car is made in America." Trump said during the speech. "And by the way, we're going to have growth in the auto industry like nobody's ever seen."
The automotive industry has been global since its inception and won't be able to adapt its years-long production cycles to produce vehicles entirely in the U.S. quickly, according to Jennifer Newman of Cars.com, an online automotive marketplace.
No cars sold to American consumers are fully made in the U.S. as they require imported parts that need to cross the country's borders, sometimes several times, during the assembly process. The marketplace's American-Made Index ranks the "most American" cars and none of them are made with parts fully sourced in the U.S.
"Even for the most American-made vehicle, you're still looking at 30% worth of parts that are not produced here," said Patrick Masterson, Cars.com's lead researcher who oversees the index. "Assembly, that part of the process, can happen here. But the parts, the raw materials like steel and aluminum, that sort of thing, would be harder to source entirely from the U.S."
In order to advertise a product as being "Made in USA," it must be “all or virtually all” made in the U.S., according to the Federal Trade Commission. In the case of a car, that could mean the majority of its parts were sourced domestically and that it was assembled in the U.S. The FTC notes that a product made with a substantial amount of parts sourced internationally should be labeled "Made in USA with imported parts."
A Cars.com report analyzing data from early February found that 51.4% of new inventory vehicles had their final assembly in the U.S. Meanwhile, 18.9% were assembled in Mexico, 4.2% were assembled in Canada, and 1.4% were assembled in China.
General Motors, Ford, and Stellantis all build cars in Canada and Mexico that they sell to American consumers. Ford and General Motors also build vehicles in China that they sell in the U.S.
On Wednesday, the president allowed a one-month delay on 25% tariffs for cars imported from Mexico and Canada. When and If enacted, they along with 20% tariffs on China could risk job cuts for automotive industry workers and price increases for consumers, experts said, as American automakers have to absorb the costs imposed by the taxes.
"Even though there is a reprieve, it's not over," Newman said. "Clearly it seems as though the president is using this as a tool for negotiations... So even if this is all resolved this year, it could come back in the future and it's something I think automakers are going to have to take into consideration."
What are the 'most American' cars?
The Tesla Model Y is the most American-made car, according to the index. The product from billionaire and DOGE lead Elon Musk's company has ranked first three years in a row. The list is created using five criteria: assembly location, parts content, engine origin, transmission origin and U.S. manufacturing workforce.
While the Tesla Model Y consistently ranks first in those categories collectively, Newman noted that electric vehicles face a unique challenge because they require batteries and therefore minerals that are not sourced in the U.S.
Below are the top 10 "most American" cars according to Cars.com's American-Made Index. Whether purchasers of these cars would qualify for Trump's proposed tax deductible interest payments on their loans remains to be seen.
- Tesla Model Y, assembled in Fremont, California, and Austin, Texas
- Honda Passport, assembled in Lincoln, Alabama
- Volkswagen ID.4, assembled in Chattanooga, Tennessee
- Tesla Model S, assembled in Fremont, California
- Honda Odyssey, assembled in Lincoln, Alabama
- Honda Ridgeline, assembled in Lincoln, Alabama
- Toyota Camry, assembled in Georgetown, Kentucky
- Jeep Gladiator, assembled in Toledo, Ohio
- Tesla Model X, assembled in Fremont, California
- Lexus TX, assembled in Princeton, Indiana
Reach Rachel Barber at rbarber@usatoday.com and follow her on X @rachelbarber_