1. Prepare for tariff permanence: Even with the Supreme Court ruling overturning IEEPA tariffs, the 25% Section 232 tariffs and the new 10% global tariffs will continue to factor into import and pricing considerations for the long term. Evaluate country-of-origin strategies, supply chains, customs classifications, and contract reopeners now rather than waiting for policy changes that may never come.
2. Plan for regulatory divergence: If California’s waiver authority is restored, OEMs will face dual standards again. Maintain flexibility in product planning to accommodate both lenient federal rules and stricter state requirements.
3. Adjust EV economics without subsidies: Federal tax credits are gone. Pricing strategies, lease structures, and consumer financing programs will need to continue to adapt to a market where EVs compete on merit.

Tariff policy may loom large throughout our report, but heightened concern over USMCA renegotiations, CAFE standards, and the elimination of the EV tax credit suggests an industry facing interconnected policy pressures. USMCA renegotiations (49%) have surged to become the second-highest concern, up 30 percentage points from 2025. This dramatic increase reflects growing recognition that the 2026 review will likely involve substantive renegotiation rather than routine affirmation, with potential changes to rules of origin, labor-value content rules, efforts to address Chinese inputs, as well as tariff treatment for vehicles and parts moving within North America.

NHTSA’s CAFE revisions efforts to revoke California’s Clean Air Act waiver and the repeal of EPA’s endangerment finding (44%) have jumped 25 percentage points from 19% last year, making it the third-highest concern. This surge reflects the high stakes of pending litigation that will determine whether the industry operates under a single federal standard or returns to a dual-standard world in which California and aligned states effectively dictate national vehicle technology plans.

Concern over the elimination or modification of EV tax credits (41%) has increased 22 percentage points from 19% last year, suggesting the full market impact is only now being felt, as companies adjust pricing strategies and witness consumer response to EVs competing without incentives.

Respondent focus on reshoring initiatives declined to 15%, down 10 percentage points from 25% last year, which may reflect that many reshoring decisions are already underway, reducing the perceived need for additional policy support. The auto loan interest deduction (10%) and reduced regulatory oversight of labor practices (9%) register minimal concern, suggesting these policies are viewed as either insufficiently impactful or unlikely to materially affect business operations.

With a 79% response rate, tariff policy has remained the dominant policy concern. Companies across the automotive sector are coming to the realization that they need to develop long-term strategies to minimize the impact of tariffs on their business (up from 71% in 2025). The answer to which government policy matters most has not changed, but what has changed is the industry’s understanding that tariffs are here to stay and not just a temporary disruption.

The 25% Section 232 tariff on imported automobiles and auto parts has become a meaningful factor in manufacturing, sourcing, and market‑selection decisions. Under the current framework, imports from USMCA-compliant Mexico and Canada receive favorable treatment, effectively rewarding highly localized North American supply chains and penalizing reliance on Europe and Asia. The Administration’s “carrot and stick” approach is influencing investment decisions worth billions of dollars.

The practical impact extends across all business functions. For manufacturing, tariffs determine plant location decisions and capital allocation. In procurement, they drive country-of-origin strategies as companies analyze the possibility of sourcing components from different jurisdictions to minimize tariff impact. For legal teams, they trigger contract reopeners as parties dispute who bears unexpected additional costs, spark customs classification disputes when importers and CBP disagree about which tariff codes apply to complex assemblies, and lead to trade remedy litigation challenging the legal basis for certain duties.

The intersection with other policy priorities is direct. USMCA renegotiations, cited by 49% of respondents, are viewed as significant because changes to the agreement could affect the tariff-favored status of North American production. CAFE standards (44%) influence which vehicles manufacturers choose to build, while tariffs may influence whether those vehicles can be produced profitably. Similarly, the elimination of the EV tax credit (41%) affects consumer demand, but tariffs can influence vehicle prices, particularly when combined with other cost pressures.

The concern expressed by a majority of respondents reflects a growing recognition that tariff policy has become a central consideration in strategic planning alongside other commercial and regulatory factors. Respondents note that earlier expectations around the negotiability or temporary nature of tariffs have, in some cases, shifted. As a result, attention is increasingly focused on how companies can adapt operations and planning assumptions within the current trade policy framework.