Looming tariffs on auto parts will destabilize supply chains and lead to production stoppages, layoffs and supplier bankruptcies, a coalition of trade organizations representing automakers, parts companies and dealers said in a joint letter to Trump administration officials.
“Most auto suppliers are not capitalized for an abrupt tariff induced disruption,” the April 21 letter reads. “It only takes the failure of one supplier to lead to a shutdown of an automaker’s production line. When this happens, as it did during the pandemic, all suppliers are impacted, and workers will lose their jobs.”
The letter is a rare joint statement from groups representing businesses across the auto industry’s vast supply chain, from parts makers to dealers. It comes as the auto industry braces for another round of tariffs by May 3, when 25 percent duties on a wide range of auto parts are scheduled to begin.
It underscores widespread fears from executives and analysts about the impact parts tariffs will have on suppliers, many of which are financially distressed following the pandemic and years marked by inflation and supply chain challenges.
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“Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable,” the letter reads.
The letter is addressed to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. It is signed by the heads of the following trade groups:
- Alliance for Automotive Innovation, which represents automakers, suppliers and tech companies
- American Automotive Policy Council, which represents the Detroit 3
- American International Automobile Dealers Association, which represents dealers of foreign brands in the U.S.
- Autos Drive America, which represents international automakers in the U.S.
- MEMA, which represents U.S. suppliers
- National Automobile Dealers Association, which represents new-vehicle dealers across the U.S.
The groups said they combine to support 10 million U.S. jobs and contribute $1.2 trillion to the economy annually.
The letter comes after Trump said he was considering providing tariff relief for the auto industry.
“I’m looking at something to help some of the car companies, where they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time because they’re going to make them here,” Trump said April 14.
Such relief would be a “positive development” for the industry, the trade groups said.
“We support more manufacturing and additional supply chains that run through the United States, but it is not possible to reroute global supply chains overnight or even in months,” they said. “This will take time.”
The 25 percent parts tariffs will apply to engines, transmissions, powertrain parts and electrical components imported to the U.S. from countries other than Canada and Mexico.
Canadian and Mexican components that comply with the rules of the United States-Mexico-Canada Agreement will not be subjected to the tariffs until the Commerce Department creates a mechanism to apply the duty only to the parts’ non-American content.
They follow 25 percent tariffs on vehicle imports, which began April 3. Automakers are responding to the tariffs in a variety of ways, including by raising prices and making changes to production plans.
