In a year dominated by geopolitical turbulence and shifting trade policies, Japanese automakers find themselves in an increasingly difficult position. And among them, none are feeling the heat more than Subaru.

The small yet fiercely loyal brand from Japan is the most exposed of its peers to the 25% auto tariffs recently imposed under the Trump administration. These tariffs, targeting vehicles imported from Japan, threaten to derail Subaru’s financial stability — unless one model can rise to the occasion: the Forester.

Through the first five months of 2025, Subaru has sold 84,629 Foresters in the United States — a modest 3.9% increase year-over-year. Yet this slight uptick carries enormous significance: the Forester is now Subaru’s best-selling model in its largest market, accounting for a major share of the brand’s U.S. presence.

Subaru’s reliance on the American market is staggering. In the fiscal year ending March 2025, the automaker sold 936,000 vehicles globally, with 662,000 — a full 71% — going to U.S. buyers. But that success has come at a cost. Roughly half of the vehicles Subaru sells in the U.S. are still imported from Japan. With the new tariffs in place, the company expects to take a $2.5 billion hit to its operating profit — nearly erasing its $2.79 billion profit from the previous fiscal year.

At the heart of Subaru’s strategy to weather the storm is the new-generation Forester. Launched last year to mixed design reviews, the SUV has now gained a hybrid variant aimed at bolstering its appeal in a fiercely competitive compact crossover market.

Production of the Forester is currently based in Japan, but that’s set to change. Starting this fall, Subaru will begin manufacturing the Forester at its Indiana plant — a significant step toward tariff mitigation. According to Nikkei Asia, the automaker is preparing to boost capacity at the U.S. facility, with company president Atsushi Osaki noting the potential to scale beyond 400,000 vehicles annually.

In Japan, the new Forester is already showing strong momentum. Subaru received nearly 12,000 orders for the model in April — more than double the previous monthly record. By comparison, the U.S. market saw just 19,330 Foresters sold that same month, a sign that there is still room for growth in America.

However, expanding U.S. production is easier said than done. Speaking at Subaru’s recent annual shareholder meeting, Osaki emphasized the challenges of relocating more manufacturing stateside. “It’s true that it would improve our ability to deal with tariffs [to produce more cars in the U.S.], but it would be difficult without the cooperation of all our suppliers,” he explained. “We need to think about this holistically.”

For now, the Forester’s performance in the U.S. market could well determine the trajectory of the entire company. With rising pressure from tariffs, changing consumer preferences, and limited domestic production capacity, Subaru’s future hinges on whether its star SUV can truly live up to its name.

Source: Automotive News