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

LAS VEGAS: Global auto suppliers are working out how much of their production can be moved to the United States, or closer to it, as a defence against tariffs promised by President-elect Donald Trump, according to industry executives at CES in Las Vegas.

The auto industry has already experienced eight years of US protectionism, from real and threatened tariffs during Trump’s first term and then more tariffs and the US Inflation Reduction Act under President Joe Biden. Most of those measures were aimed squarely at China, in particular a proposal by the Biden administration to bar Chinese software and hardware from cars on US roads.

But Trump has vowed to go much further, imposing a blanket tariff of 10 per cent on global imports into the United States and a far higher 60 per cent tariff on Chinese goods. In late November, he specifically pledged a 25 per cent tariff on imports from Canada and Mexico when he takes office on January 20.

Such high tariffs would be hard to pass on to consumers and would render many auto parts produced in lower-cost markets uneconomical, or in the case of China make it virtually impossible to sell products in the US.

“Anyone can do the math,” Paul Thomas, North American president for Bosch, the world’s largest car parts supplier, told Reuters. “If it’s 10 per cent, 20 per cent, 60 per cent (tariffs) ... you have to say, ‘OK, how many scenarios make sense for that and which ones do we act on?’”

“We’ve already started on a few of those even before he (Trump) will take office.” Speaking on the sidelines of the CES tech conference, Thomas gave a theoretical example of a generic electronic control unit that Bosch might currently make in Malaysia or a similar market, but now “we’re looking at doing that in Mexico or Brazil ... areas where we have a footprint already,” he said.

Bosch is waiting until January 20 to see what actually happens before it makes any “significant decisions”, Thomas added, a point echoed by other suppliers and automakers. During his first term, Trump used the threat of tariffs against specific countries or even individual automakers to prod them into boosting US production.

When Toyota announced plans to produce the Corolla sedan in Mexico for US consumers in early 2017, Trump took to Twitter, now known as X, saying “NO WAY! Build plant in US or pay big border tax.”