Trump’s tariff threat spurs auto suppliers to rethink production plans

Las Vegas: So, it looks like auto suppliers are really feeling the heat from Trump’s tariff threats. They’re scrambling to figure out how much of their production can be shifted to the U.S. or at least closer to it. This is all happening as they gather at the CES tech conference in Las Vegas.

The auto industry has been through a lot lately, especially with the past eight years of U.S. protectionism. There have been real and threatened tariffs during Trump’s first term, and then more under Biden’s Inflation Reduction Act. Most of these measures were aimed at China, but now Trump is promising to take it up a notch.

He’s talking about a blanket 10% tariff on global imports and a whopping 60% on Chinese goods. Plus, he’s even mentioned a 25% tariff on imports from Canada and Mexico. That’s a big deal! If these tariffs go through, it could make a lot of auto parts from cheaper markets too expensive to sell in the U.S.

Paul Thomas from Bosch, the biggest car parts supplier, mentioned that they’re already crunching the numbers. They’re looking at moving production from places like Malaysia to Mexico or Brazil, where they already have a presence. But they’re holding off on any big decisions until Trump officially takes office.

During his first term, Trump used tariffs as leverage to push automakers to boost U.S. production. Remember when Toyota planned to make the Corolla in Mexico? Trump tweeted about it, and soon after, Toyota announced a new plant in Alabama instead.

Now, major suppliers are trying to localize production to avoid parts shortages and border tax risks. This trend picked up speed after the Biden administration passed the IRA, which encouraged suppliers to invest more in the U.S. market. But with Trump coming in, there’s uncertainty about what will happen next.

Continental’s CEO mentioned they’re talking to suppliers in North America to see if they can find local components to avoid tariffs. Honda is also considering shifting production locations based on tariff levels. They currently make a lot of vehicles in Mexico for the U.S. market, but that could change.

Panasonic Energy is already working on shifting its supply chain to North America, especially for EV batteries. They want to eliminate Chinese materials from their U.S.-made batteries, which is a big goal for them.

So, it’s a pretty tense time for the auto industry as they navigate these potential changes. Everyone’s waiting to see what Trump’s tariffs will really mean for their production plans.
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