The question of automotive sector-related tariffs was, again, put on the back burner last week. Everything will be reviewed at the beginning of April, and even if their imposition seems unlikely, as it would kill the North American industry, it's impossible to predict what the American administration will do.
Across the industry, people are considering every possible scenario and preparing for the worst. The stated aim of the U.S. administration is to force carmakers and connected suppliers to move their production to the U.S., but that can't happen overnight, and the complexities involved would be enormous. We can imagine much brainstorming going on at Ford, Stellantis and GM HQs.
Automotive News site took a closer look at what that brainstorming might result in, including on the part of suppliers.
Suppliers
The outlet reports that a third of American parts suppliers have said they would move production out of the U.S. if the 25-percent tariffs on Canada and Mexico were to remain in force for six months. Automotive News cites a survey carried out in February by MEMA Original Equipment Suppliers, a firm representing U.S. auto parts manufacturers.
According to the survey, more than 80 percent of U.S. suppliers surveyed said the tariffs on Mexico would have a negative impact on their business. More than two-thirds said the same about tariffs on Canada.
What’s more, almost a quarter of the suppliers surveyed said they would reduce or delay their investments if the tariffs lasted just one month. If the tariffs were to last six months, almost half of the suppliers surveyed said they would cut jobs in the USA.
While it is understood that manufacturers cannot act as quickly as the Trump administration would like, some can be expected to make promises to the Trump administration to avoid the 25% tariffs being lifted on April 2. We can imagine scenarios being put on the table where the big three automakers commit to moving production to the US, or at least increasing it.
Automakers
Car & Driver meanwhile contacted the big three U.S. automakers and shared their response. Here’s what each told the outlet.
“We thank President Trump for his approach, which enables American automakers like GM to compete and invest domestically. With more vehicle assembly plants in the U.S. than any other automaker, GM has invested over $60 billion since the USMCA took effect, and we continue to invest billions of dollars every year in our manufacturing base, supply chain, and U.S. jobs. We are committed to continued growth and delivering winning vehicles to American consumers.”
- General Motors
“As America's top auto producer, we appreciate President Trump's work to support our industry and exempt auto companies complying with USMCA. Since President Trump's successful USMCA was signed, Ford has invested billions in the United States and committed to billions more in the future to both invest in American workers and ensure all of our vehicles comply with USMCA. We will continue to have a healthy and candid dialogue with the Administration to help achieve a bright future for our industry and U.S. manufacturing.”
- Ford
“We thank President Trump for the decision to grant a one-month exemption from tariffs to USMCA-compliant products. We strongly support his determination to enable the American automotive sector to thrive, and in the first 100 hours of his new Administration we announced major investments to grow our business in America. Since the USMCA was enacted in his first term, we invested billions in our U.S. activities and U.S. suppliers. We share the President's objective to build more American cars and create lasting American jobs. We look forward to working with him and his team.”
- Stellantis