Why American Automakers Need Foreign Competitors

Tariffs. Seven letters, strung together to form a word that is currently causing economic uncertainty around the world as the US administration embarks on its new international trade policy. Clearly, these are controversial, with folks from all sides of the fence voicing their concerns about the impact on the economy, and on the spending power of average Americans. But here’s the thing: this perceived turmoil may also offer the American auto industry a golden opportunity to unlock a new level of innovation, and change the way it develops and produces cars, thanks to stiff competition from international car companies.

Companies like Ford and Cadillac have already made a notable shift in the focus of the cars they produce, taking a page out of a successful book written by foreign car companies.

Available Years

Select Available Years2025 Ford Mustang GTD

Mustang GTD

Model

Mustang

Segment

Sports Car

Base MSRP

$300,000

Body Style

Coupe

In 2024, when Ford rocked up at the legendary Nürburgring Nordscheliffe track with the purpose-made Mustang GTD, and managed to complete a lap in less than seven minutes, it became the first American production car to ever do so. The Green Hell, as the track is also known, was built in 1925. So why did it take 100 years for an American car to achieve such a feat?

Because for many decades, most American auto brands were focused on building American cars for American customers, they hardly seemed to bother to look over the fence to see what foreign car companies were doing, and comparing their own products directly against those products. And on a number of occasions, foreign cars were better than American ones. The Mustang GTD would not exist if Porsche hadn’t built the 911 GT3 RS, for example.

Now, with more foreign competition than ever before, the winds of change have the potential to benefit the consumer – and ultimately, the car companies too.

The Arsenal Of Democracy

Adolf Hitler’s army rolled into Poland in 1939, kicking off the Second World War, changing the world forever. Late in 1940, US President Franklin Roosevelt called upon the manufacturing industry to turn the USA into ‘the arsenal of democracy’, and rise to the challenge of defeating the Axis powers. US factories obliged in a big way. Car manufacturing plants started turning out tanks, planes, engines. Munition factories churned out ammunition at a rate never seen before. In fact, by early 1944, the US industry was manufacturing almost the same amount of munitions as all of its enemies and allies, combined. In 1944, the unemployment rate in the USA was just 1.2% – the lowest rate ever.

Despite all this manufacturing prowess and all the jobs created, there were fears that, once the war was over, the massive manufacturing industry would promptly fall apart. The contrary proved to be true. After the war ended in 1945, factories that made tanks again made cars. Factories that made munitions during the war, for instance, were turned into consumer product manufacturing plants. After years of living on the breadline during the war effort, Americans were ready to spend… and the manufacturing sector rose to the occasion, churning out the goods. In short, the American economy boomed, and the US evolved from one of the world’s top economies into a super economy.

And by all accounts, it seems that the US administration is attempting to use tariffs to wake up the sleeping giant that is the US manufacturing sector.

Still, competitive foreign brands can have a positive effect on American cars too. Cadillac, for one, is a great example of how an American car company comprehensively changed the way they develop cars, providing customers with a new generation of great cars, ready to take the fight directly to the European and other brands.

Cadillac Gets Some Dynamic On

Cadillac, a division of General Motors, has made massive strides in producing great cars that offer far more than an American-made mode of transport between points A and B.

First, the not so great. In 1982, Cadillac introduced the Cimarron. According to urban legend, Cadillac dealers were frustrated with the parent company because they lacked a small luxury sedan to compete with the European brands. But instead of investing time and resources developing a Cadillac contender that could go toe-to-toe with the European cars, Cadillac did a half-baked job and repurposed the drivetrain from the Chevrolet Cavalier, and dressed it up in a body that was just barely okay. To add further fuel to the fire, the Cimarron was initially powered by a woefully under-powered 1.8-liter four-cylinder engine that produced just 88 hp. Quality issues and reported bad handling didn’t help either. And the fact that the Cadillac was also more expensive than the Cavalier upon which it was based.

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In the end, parent company General Motors comprehensively missed the target with the Cimarron, its product planning department clearly getting it very wrong.Fast-forward to 2025, and the latest Cadillac CT5-V Blackwing. Yes, the 668 hp Blackwing does share some components with its General Motors stablemates, but it is an outstanding automobile in its own right. Cadillac, in a magnificent move, decided to stick with a six-speed manual gearbox, sending the power to the rear wheels. In a modern world where the vast majority of US and foreign performance sedans have all the power in the world, their automatic transmissions take much of the pleasure out of the driving pleasure (even though they are crazy fast).Throw in the excellently-tuned Magneride adaptive suspension, the super-slick manual gearbox, the limited-slip rear differential, the supercharged V8, the optional Precision Pack, carbon ceramic brakes… this Caddy is not only an outstanding example of an American performance sedan, it is better than most foreign performance sedans lining up in the same class. Cadillac not only learned from the past, it surpassed the competition that once gave it carrots. And it wasn’t the first time. Cadillac started building cars that could spank the Germans way back in the early 2000s when it introduced the first CTS-V. It’s a superb used buy these days.What a way the brand has come since the Cimarron.

Learning From The Competition

Time will tell what influence tariffs will have on the cars we drive in the future. But for now, the competition from foreign motoring brands is resulting in ever-improving, ever-faster American performance cars too.

Car companies like Porsche, BMW and Hyundai use the Nürburgring to fine-tune their high-performance cars. And we’re not talking about how much horsepower a car makes. The Green Hell instead serves as a proving ground to adjust dynamic aspects such as steering input, gear changes, suspension set-up, rev limits, and so on. And now, with Ford breaking the ice with its 815-hp Mustang GTD, it has opened the door for other performance cars like the Cadillac Blackwing to go and give the Europeans a tough old time in their own backyard.

This is the advantage of having some competition in the game. It always pushes companies to go further, harder and faster, to stay ahead of the competition. Of course, it is not only about speed and lap times and driving pleasure. It is also about safety, new technology, new manufacturing processes. As the Second World War demonstrated, a bit of pressure to get great things done goes a long way in actually getting great things done.

A Golden Opportunity?

Clearly, the so-called tariff war is a controversial one. Some car companies are facing real operational challenges, while others realize the biggest storm to hit the US auto industry in four decades may represent a golden opportunity.

Toyota, the world’s largest car company, recently announced a $13.9-billion EV battery manufacturing plant in North Carolina, an additional $88 million for a new manufacturing facility in West Virginia, and the possibility of a new EV factory in the future, signaling the company’s commitment to the US market. Volkswagen and Audi, on the other hand, have halted the shipment of their Mexican-made cars to the USA following the tariff announcement. The company is reviewing its position before making a decision on how to navigate the stumbling block.

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This also comes at a time when China, the world’s most prolific car manufacturer and exporter, is vastly expanding its export programs to countries like Russia, Mexico, Belgium, Australia, South Africa, and many others, effectively flooding those markets with affordable new cars. The longer-term impact of this new trend will, most likely, have a massively negative impact on these countries’ established auto industries. In that sense, the combination of the United States’ tough safety and emission import legislation, and the current tariff war raging between the US and China, will serve to protect the US auto industry in the longer run, offering greater opportunities for US brands.

Removing The Competition

Taxing brands that don’t produce cars in the USA may have a dire impact from a competitive point of view. Ford was motivated to build the Mustang GTD because European brands dominated the sub-seven-minute category at the Nürburgring. That doesn’t really concern the average American buyer, but you can also look at the Mustang Dark Horse, named that because it was a rival the Germans didn’t see coming.

The BMW M4 is the daddy of its segment, and it has been for some time. But then the Dark Horse entered the chat and showed the Germans that it too could build a proper sports car. With an NA V8 and a manual gearbox. For $20,000 less.

And it’s not just limited to sporty cars. Europe forced America to up its game when it comes to luxury. If you compare the interior quality of an early 2000s Jeep Grand Cherokee to the model you can buy right now, you’ll see they are a world apart. Jeep had to make this change in order to compete on a global scale. Competition breeds innovation and excellence, and if you remove said competition via tariffs, what incentive is there to continue striving for supremacy?

Conclusion

We leave the last word to Ford CEO, Jim Farley. The auto industry veteran believes the current situation indeed represents a business opportunity for Ford, with the company planning to offer its cars at prices that represent excellent value for money for every American. He also told Fox News reporter Laura Ingraham that although he believes the current situation does represent an opportunity for Ford to gain more business, the biggest fight in the auto industry in 40 years is definitely brewing, considering the effects tariffs will have on some foreign car companies.

In the end, if all goes according to the administration’s game plan, the American consumer will be the winner, through and through. But only time will tell how this pans out.

Sources: History.com, Ford, Cadillac, Nikkei Asia, Fox News.