The largest domestic automotive groups say higher tariffs on auto parts will cost U.S. carmakers billions of dollars while scrambling the global supply chain, hiking consumer prices and lowering sales.
In a signed letter to the Trump administration, leaders from the Alliance for Automotive Innovation, the American Automotive Policy Council, the American International Automobile Dealers Association, Autos Drive America, the Motor and Equipment Manufacturers Association and the National Automobile Dealers Association said tariffs on auto parts slated to begin May 3 will be detrimental to an industry that supports 10 million U.S. jobs and has a $1.2 trillion annual impact on the nation’s economy.
Automotive leaders also expressed that while the United States-Mexico-Canada Agreement has benefited the industry by supporting U.S. jobs and preserving vehicle affordability, additional tariffs would create disruption, especially to global supply chains that are critical to domestic production.
“Most auto suppliers are not capitalized for an abrupt tariff induced disruption,” the letter says. “Many are already in distress and will face production stoppages, layoffs and bankruptcy.”
If one supplier is disrupted, it could lead to a shutdown of an automaker’s production line, according to the letter. “When this happens, as it did during the pandemic, all suppliers are impacted, and workers will lose their jobs,” the letter reads.
In the letter, automotive leaders commended the administration’s “openness to reconsidering” its 25% tariff on imported automotive parts, saying it “would be a positive development and welcome relief.”
However, they warned of the possible consequences if the tariffs go into effect next month.
The global auto industry has already been in upheaval since the Trump administration implemented assorted tariffs, including a 25% duty on all vehicles made outside the U.S, save for those compliant with the USMCA.
Automotive industry analysts say the uncertainty caused by tariffs has led organizations like Cox Automotive to revise their full-year domestic production forecasts.
Increased tariffs are also driving some automakers to rethink U.S. production, including Nissan Motor Co.. The company recently reversed a plan to reduce operations of its Rogue SUV at a Tennessee plant from two lines to one. The carmaker will now maintain both lines to circumvent the tariffs.
Meanwhile, Canada has agreed to exempt “a certain number” of USMCA-compliant vehicles assembled in the U.S. from 25% duties it placed on U.S. car imports in response to the U.S.’ own duties on automobiles.
