[By Guancha Observer Network, Zhang Jiadong; Edited by Gao Shen]

According to a report on April 8 by Automotive News, Stellantis North American executives told suppliers that as long as the latter take measures to reduce risks, the carmaker will bear their tariff costs.

On April 3, the 25% import tariff on foreign cars announced by the Trump administration officially took effect, causing significant impacts on most multinational automakers in the U.S. Due to the uncertainty of future tariff policy changes, manufacturers including Jaguar Land Rover, Infiniti, and Audi have decided to suspend shipments of imported vehicles to the U.S.

Reuters

As for the 25% auto parts tariff set to take effect on May 3, most automotive companies are showing hesitation.

It is reported that this tariff on auto parts will apply to all products from engines and transmission components to electronics, seats, and windshields. However, the U.S. government stated that parts complying with the United States-Mexico-Canada Agreement (USMCA) will be exempted until a system for reviewing U.S. parts is implemented by the Commerce Department.

Back in March when Trump initially revealed plans to impose tariffs on cars, parts, steel, and aluminum, automakers in the U.S. began investigating their suppliers to better understand the impact of tariffs on their costs.

Currently, neither Ford nor General Motors has disclosed how they plan to address the tariffs. However, Stellantis, which has half its heritage in the U.S., has proposed certain initiatives to its suppliers.

Insiders said that suppliers must detail their tariff reduction strategies, develop cost-saving plans, and have them verified by a third party. Afterward, Stellantis will cover the increased tariff costs.

Recently, Stellantis also announced layoffs of nearly 1,000 people in the U.S. due to tariffs. Additionally, it will offer consumers the same purchase discounts as employees.

Stellantis' Dundee Engine Plant in Michigan Stellantis official website

Since "removing" former CEO Carlos Tavares, Stellantis has assured U.S. suppliers it would ease tensions between them. Automotive News believes that the tariff relief plan may indicate the company intends to honor this commitment.

At the same time, subsidizing suppliers for tariff costs might also reflect Stellantis' decision after sensing potential severe consequences from discord with suppliers.

Previously, Stellantis had pressured suppliers to cut costs, but some U.S. suppliers responded by withholding parts to raise supply prices. Last year, Stellantis filed lawsuits against multiple suppliers over pricing disputes. However, in March, a federal judge dismissed one of Stellantis' lawsuits against a supplier.

Industry experts say that regarding contract disputes between automakers and suppliers caused by market environment changes, U.S. law remains unclear.

Daniel Rustmann, co-chair of Butzel's automotive legal practice, noted that even if both parties clearly define that suppliers should bear the responsibility for rising costs, ultimately, most suppliers cannot withstand a 25% price increase. He said, "Taking a hard line with parts manufacturers could lead to their bankruptcy, causing more trouble for automakers." Therefore, some automakers prefer to pay to keep suppliers operational.

This article is an exclusive piece by the Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7491198872091279887/

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