Automotive Supply Chain Risk Digest #426
March 28 - April 3, 2025, by Elm Analytics
Dear reader,
What a whirlwind these last few days have been. The White House’s newest “Global and Reciprocal Tariffs” are here—swiftly reshaping how (and where) vehicles and their components are produced, shipped, and sold. In this issue, we’ll break down what we know so far about the escalating trade measures, how they may affect your operations, and the strategies that can help you mitigate their impact.
We’re also excited to spotlight the latest Automotive Leaders Podcast episode, where Elm Analytics’ own Sig Huber joins host Jan Griffiths to unpack these sweeping tariffs like never before.
Unlike a chip shortage or a single-supplier setback, there’s no simple playbook for this moment. The tentacles of this structural shift reach across engineering, manufacturing capacity, logistics, and small businesses alike—meaning the entire automotive ecosystem must respond, together. Their conversation dives into:
How sudden U.S. tariffs ripple across the full supply chain
Why this marks a structural shift—not just another short-lived crisis
The real risk of production grinding to a halt if suppliers stop shipping
How trade policy decisions today may weaken US auto tomorrow
Why stacked tariffs threaten to drown smaller suppliers
Why collaboration, trust, and transparency are now non-negotiable
The pressing need for OEMs and suppliers to map and monitor deep-tier sourcing
The leadership opportunity to reshape relationships, for better or worse
We know you’re busy, so our goal this week is to distill a jam-packed news cycle into clear direction. Whether you’re looking for actionable insights on tariff compliance, ways to safeguard supplier relationships, or a deeper understanding of global trade trends, this edition has you covered. We encourage you to explore the entire newsletter—and be sure to catch the podcast conversation with Sig and Jan. It may just shift your perspective on what’s truly at stake in the months (and years) to come.
Enjoy the read (and the listen)—and, as always, let’s keep our supply chains moving forward with collaboration, trust, and transparency.
– Nick Gaydos
Editor, Automotive Supply Chain Risk Digest
Contents
CHANGE IN MANAGEMENT
Håkan Samuelsson returns as Volvo CEO
SEAT CEO Wayne Griffiths resigns from Volkswagen Group
EXPANDING
VW invests in Argentina Amarok plant
HUMAN CAPITAL
Stellantis pauses production, lays off 900
Stellantis cuts 350 Italian plant jobs
MERGERS, VENTURES, ACQUISITIONS
Dongfeng, Changan discuss major merger
LGES acquires GM stake in Ultium
Renault takes full control in India
PRODUCTION INCREASE
GM boosts US truck production
Nissan halts US Infiniti SUV orders
REGULATION
US imposes broad reciprocal tariffs
Trump's tariffs disrupt global auto logistics
Tariff guidance from across the industry
China, EU renew EV subsidy talks
EU fines automakers for recycling cartel
RELOCATING
TYC moves auto lighting to Michigan
Change In Management
Håkan Samuelsson has returned as Volvo Cars CEO, replacing Jim Rowan, who has stepped down from the position and the board without a stated reason. Samuelsson, who previously led the company from 2012 to 2022, will serve a two-year term as interim CEO while Volvo searches for a long-term successor amid industry pressures such as softening EV demand and new US tariffs.
Wayne Griffiths, CEO of SEAT and founder of Cupra, has unexpectedly resigned from Volkswagen Group to "pursue new challenges," despite leading SEAT to record profits and establishing Cupra's success in Europe. His departure ended a 37-year tenure at VW, with no successor announced.
Expanding
Volkswagen is investing $580M to expand and refit its Pacheco plant in Buenos Aires, Argentina, to produce a new version of the Amarok pick-up truck specifically for the South American market starting in 2027. VW plans to increase its focus on localized production.
Human Capital
Stellantis will temporarily lay off 900 workers at five US facilities and pause production at its Windsor, Canada, and Toluca, Mexico, assembly plants in response to new US auto import tariffs. The affected US sites include Warren Stamping, Sterling Stamping, Indiana Transmission Plant, Kokomo Transmission Plant, and Kokomo Casting Plant.
UAW President Shawn Fain called the layoffs "a completely unnecessary choice," while union leaders in both the US and Canada expressed concern over the move's impact on workers. Stellantis COO Antonio Filosa said the company is "continuing to assess the medium- and long-term effects of these tariffs" but has already taken immediate steps impacting operations across North America.
The company also announced it will cut 350 jobs through voluntary exits at its Pomigliano and Pratola Serra plants in southern Italy, reducing its Italian workforce to around 38,000 from about 55,000 in early 2021.
Mergers, Ventures, Acquisitions
China's state-owned automakers Dongfeng Motor and Changan Automobile are in advanced talks to merge, aiming to consolidate their ICE operations and shift toward EVs due to government pressure to reduce overcapacity. Both companies operate below 50% capacity and have informed foreign partners about the potential deal.
The merger would create one of the largest automakers in China, with a combined annual output of around five million vehicles, exceeding Ford and nearing General Motors. This consolidation reflects China's strategy to cut traditional vehicle production overcapacity while enhancing its domestic EV efforts.
LG Energy Solution will acquire General Motors' entire stake in its Ultium Cells battery plant in Lansing, Michigan, for $2B. Originally a 50/50 partnership, the facility will now operate solely under LGES as it aims to enhance investment and efficiency in the US.
Renault has acquired Nissan's 51% stake in their Indian manufacturing joint venture, taking full ownership of Renault Nissan Automotive India. Both companies will continue collaborating on R&D and vehicle production.
Production Increase
General Motors will increase production of Chevrolet Silverado and GMC Sierra trucks at its Fort Wayne, Indiana plant, adding 225–250 jobs and hiring several hundred temporary workers due to US auto import tariffs. The plant will briefly shut down from April 22–25 to prepare for higher line speeds, with potential overtime.
GM CEO Mary Barra previously mentioned the possibility of shifting some truck production to the US from Canada and Mexico in response to trade changes, an example of using existing capacity to address supply chain disruptions without costly expansions.
Nissan has announced that it will halt new orders for two Mexican-built Infiniti SUVs, the QX50 and QX55, in the US due to new auto tariffs. Despite this pause, production for these models will continue for markets outside the US, and Nissan will maintain two production shifts of the Rogue SUV at its Smyrna, Tennessee plant.
Regulation
Our “concise,” but deep dive into the latest US Tariff Announcement:
1. A Fundamental Restructuring, Not a Short-Term Crisis
Structural Shift vs. Temporary Disruption
Multiple automotive leaders and analysts emphasize that these tariffs represent a long-term, systemic realignment of global supply chains—"not just a storm" that will blow over.
Unlike prior crises (bankruptcy, COVID shutdowns), localizing manufacturing and shifting suppliers could take several years, with significant ripple effects in cost, capacity, and consumer demand.
2. Tariff Structure & Timeline
A. UNIVERSAL & RECIPROCAL TARIFFS (White House Fact Sheet, Executive Order)
10% Universal Tariff:
Effective April 5 on all imports from all countries.
Additional "Reciprocal" Tariffs:
Vary by country based on trade deficits and perceived unfair barriers.
Effective April 9.
Examples: China (34%), E.U. (20%), Taiwan (32%), Japan (24%) (see Annex I for full list).
No Double-Tariff Overlap: These reciprocal tariffs do not stack on top of other special measures, such as the new auto tariffs. (see Annex II for non-applicable categories)
B. AUTO-SPECIFIC TARIFFS (SEPARATE FROM RECIPROCAL)
25% Tariff on Foreign-Made Automobiles
Began at midnight on April 2–3.
Applies on top of any existing duties or fees.
Auto Parts
Will face an additional 25% starting May 3 (potentially earlier).
C. SECTION 232 TARIFFS & POTENTIAL FUTURE ACTIONS
Steel/Aluminum
Remain at 25% from previous orders, unaffected by the new reciprocal rates.
Ongoing Investigations
Copper, lumber, and other products remain excluded while Section 232 probes continue.
Further 232 Measures
The proclamation clarifies that new Section 232 actions (or expansions) remain possible.
D. EXEMPTIONS, US CONTENT & CUSTOMS
Canada & Mexico
Exempt from reciprocal tariffs under USMCA, but preexisting 25% tariffs remain for goods not meeting USMCA rules and certain immigration/fentanyl-related provisions.
Certain Products Exempt
Semiconductors, critical minerals, and energy goods (Annex II) are excluded from reciprocal tariffs.
Partial Tariff Relief for US Content
If ≥20% of a product's value is US-origin, only the non-US content is subject to reciprocal rates.
Customs Administration Challenges
Overlapping tariffs, new codes, and separate effective dates complicate compliance in the ACE portal.
E. LEGAL AUTHORITY & EFFECTIVE DATES
IEEPA
The International Emergency Economic Powers Act is invoked to treat trade deficits as a threat to US economic security.
Key Milestones
April 3: 25% tariffs on autos in force.
April 5: 10% universal tariff begins.
April 9: Reciprocal tariffs take effect.
May 3: Auto parts face 25% (possibly sooner).
3. Immediate Impact on North America
A. CANADA & MEXICO
Canada
Non-USMCA goods face a 25% US tariff; Canada retaliated with its own 25% duty on U.S.-built cars (excluding parts).
Stellantis quickly halted production in Windsor, Ontario, after tariffs took effect—highlighting the unexpected disruption speed.
Mexico
Also subject to 25% for noncompliant autos. The Mexican president calls it a "serious threat" because ~25% of Mexico's exports are automotive.
Urgent push to increase domestic production to reduce reliance on US markets.
B. SUPPLY CHAIN INTEGRATION
Ripple Effects & Tariff Stacking
Many parts cross borders multiple times, incurring multiple tariffs (e.g., steel/aluminum plus electronics from China or the EU).
Smaller suppliers with razor-thin margins are especially vulnerable to these layered costs.
Volkswagen's New Import Fee
VW plans to offset duties by imposing an import surcharge, possibly holding shipments in port; even U.S.-assembled models may see price hikes if subcomponents are imported.
Stellantis Production Halts
Additional closures in Toluca, Mexico, and Ontario are already causing layoffs in Indiana and Michigan due to highly integrated supply lines.
4. Manufacturer Strategies
A. COST-SHARING & POTENTIAL SUPPLIER REFUSALS
Passing Costs to Consumers
Many Tier 1 and Tier 2 suppliers cannot absorb the new tariffs. Some refuse to ship parts unless OEMs cover the cost. This could prompt stop-and-go production, echoing early-pandemic supply chain disruptions.
Choppy Production Schedules
OEMs have some inventory, but once it's gone, partial shipments and cost disputes may cause sporadic plant shutdowns.
B. PRODUCTION SHIFTS OR SHUTDOWNS
Unprofitable Lines
If extended tariffs make specific models unprofitable, OEMs may idle lines or entire plants.
Multi-Year Localizing
Building or retooling major facilities can take 4–5 years (site selection, infrastructure, permits). Meaningful relocation likely won't happen within the current presidential term.
C. FORD'S TEMPORARY DISCOUNTS
"From America, For America"
Ford is offering employee-level pricing on most 2024–2025 models, hoping to counter sticker shock and shore up demand.
5. Broader Risks & Implications
A. STRUCTURAL, LONG-TERM DISRUPTION
Deep Supply Chain Overhaul
Unlike a bankruptcy or short-lived crisis, this is a fundamental reconfiguration of where and how parts are produced.
Even moderate additional production shifts require significant capital outlays and heavy engineering resources.
B. FINANCIAL FRAGILITY & SUPPLIER FAILURE
6–8% Already at High Risk
Data indicates a 5% jump in the cost of goods sold can double the number of "red" suppliers.
Lenders could clamp down if suppliers breach loan covenants, further tightening liquidity.
C. DEMAND CONTRACTION & PRICE SENSITIVITY
Fewer Vehicle Sales
A $3,000 price increase might cut 1.3 million annual vehicle sales (per the Center for Automotive Research).
Lower volumes aggravate suppliers' cost burdens and reduce the OEMs' economies of scale.
D. CAPACITY & ENGINEERING BOTTLENECKS
Limited US Capacity
Some underused lines exist, but not nearly enough to cover large-scale localization. EV lines are often earmarked for future electrification volumes and may not be easily repurposed for ICE.
Engineering Resource Shortage
Mass "resourcing" or redesign of components is constrained by engineering talent, especially if suppliers must shift from overseas components or materials.
E. CURRENCY & RETALIATION UNCERTAINTY
Global Retaliation
Other countries may respond with counter-tariffs, stoking more unpredictability in the US export market.
Exchange Rates
The US dollar could initially strengthen but might weaken under broader retaliatory pressures, creating further financial volatility.
6. Key Takeaways for Supply Chain Managers
Prepare for a Marathon, Not a Sprint
Expect years of structural realignment, not a short disruption. Contingency plans must be long-term.
Map Your Supply Chain & Costs
Understand deep-tier dependencies and potential "tariff stacking." Evaluate each supplier's financial health.
Collaboration & Trust Are Critical
Suppliers and OEMs must share data transparently and co-develop solutions—blanket "pass-down" approaches will invite refusals or shutdowns.
Watch Capacity & Engineering Constraints
Localizing production or shifting suppliers requires substantial lead time, capital, and scarce technical resources.
Forecast Price & Demand Shifts
Tariffs could spark a sharp reduction in sales. OEMs must gauge consumer price sensitivity and revise product mix or volumes accordingly.
These new tariffs are upending the global automotive landscape, forcing automakers and suppliers to reevaluate everything from where parts are sourced to how final vehicles are assembled.
The resulting environment is far more than a temporary headwind: it's a long-term, structural reconfiguration that could reshape the industry's manufacturing base, supply-chain finance, and relationships.
Staying agile—through close collaboration, financial risk management, and detailed supply-chain visibility—will be vital for survival and growth.
A newly published update to Trump's March 26 auto tariff policy adds nearly 150 specific parts categories—set to face 25% duties starting May 3—including engines, transmissions, lithium-ion batteries, tires, shock absorbers, spark plug wires, brake hoses, and automotive computers (grouped under broader electronics codes).
Although vehicles were already covered under the initial April 4 implementation, the latest update significantly expands the scope by targeting core components critical to internal combustion and electric vehicles.
The updated and expanded list signals deeper cost pressures ahead for US vehicle assembly operations, especially those dependent on globally sourced components.
Industry Insight:
Foley: What Every Multinational Company Should Know About … The Global and Reciprocal Tariffs Announcement
Bain: From China to Trouble? Swapping supply chains doesn't mean escaping risk.
BCG:
Automotive Logistics: Trump's "Liberation Day" automotive import tariffs disrupt global production, logistics and investment strategies
PwC: PwC comments on the impact of US trade tariffs on the UK automotive sector
China and the European Union have agreed to resume negotiations on a price commitment plan related to the anti-subsidy investigation of Chinese electric vehicles to promote a stable environment for investment and industrial collaboration.
The EU fined Volkswagen, Stellantis, Renault, and other automakers a total of $506M for participating in a long-running cartel that restricted competition in recycling practices for end-of-life vehicles. The EU found the companies colluded for over 15 years to avoid advertising recyclability and remained silent on using recycled materials in new cars.
Relocating
TYC Americas, a Taiwanese automotive lighting supplier, will invest $18.8M to relocate manufacturing from East Asia $ to a new facility in Wixom, Michigan, creating 109 jobs.
The company acquired the former Detroit Public Television headquarters in late 2023 and secured a $981k performance-based grant from the state, choosing Michigan over Georgia for its US expansion.
