Global auto suppliers are evaluating strategies to mitigate potential tariffs proposed by U.S. President-elect Donald Trump, with many considering shifting production closer to the United States. Industry leaders discussed these challenges during the CES tech conference in Las Vegas, highlighting how new trade policies could reshape automotive supply chains.
Trump has pledged to impose a blanket 10% tariff on all global imports and a 60% tariff on goods from China, with additional measures targeting imports from Canada and Mexico. Paul Thomas, North American president for Bosch, the world’s largest auto parts supplier, said the company has already started exploring alternatives, including moving production to Mexico or Brazil. “If it’s 10%, 20%, 60% tariffs … you have to say, ‘OK, how many scenarios make sense for that and which ones do we act on?'” Thomas told Reuters.
During Trump’s first term, the threat of tariffs was frequently used as leverage to encourage increased U.S. manufacturing. Suppliers and automakers adjusted by localizing production, a trend that accelerated under President Joe Biden’s Inflation Reduction Act (IRA). The IRA incentivized investments in the U.S. market for electric vehicle (EV) components, though Trump’s incoming administration aims to dismantle parts of the law.
Honda and Continental have also begun assessing their production strategies in light of potential tariff increases. Noriya Kaihara, Honda’s executive vice president, noted that shifting production from Mexico to Japan or other locations might be necessary. “We have not formalized what we can do, but we are elaborating what we will be able to do,” Kaihara said.
Meanwhile, Panasonic Energy, a key EV battery supplier to Tesla, has intensified efforts to eliminate Chinese materials from its U.S. supply chain. Allan Swan, president of Panasonic Energy North America, emphasized the company’s goal to secure alternative sources. “The aim is not to have the supply chain dedicated from China,” Swan told Reuters.
As the industry awaits Trump’s inauguration on Jan. 20, suppliers remain cautious, balancing long-term strategies with the need to adapt to rapidly evolving trade policies.
Source: Reuters
