[Source / Observer Network / Zhang Jingjuan] In the face of the impending 25% auto tariff in the United States, Magna, a major Canadian auto parts giant, is making efforts to cope.

According to a report by the South China Morning Post on February 2nd, Swamy Kotagiri, CEO of Magna, said that to achieve new growth, the company is turning its attention to the Chinese market.

"We have experienced a series of black swan events. Our industry can truly thrive on the basis of certainty, rhythm, and stability. These are exactly what we lacked over the past four years," Kotagiri said.

The report states that Magna has more than 170,000 employees across 28 countries. Based on the North American Free Trade Agreement (NAFTA) of the 1990s, the company has 59 factories in the U.S., 50 in Canada, and 33 in Mexico, creating a highly interconnected system where components are sent from one country and then transported back to another to produce vehicles in some of the world's largest markets.

However, like other automotive companies, the company faces an industry undergoing disruption.

U.S. President Trump announced his auto tariff plan last week: a 25% tariff will be imposed on all cars not manufactured in the U.S., as well as specific auto parts. The relevant measures will take effect on April 2nd, with collection starting the next day. This move is expected to increase consumer prices, reduce market demand, and impact employment growth.

A few hours before Trump demanded the imposition of the 25% tariff, Kotagiri bluntly stated that there was no "simple way to absorb this policy," adding that most of the tariff costs would be passed on to consumers. Analysts pointed out that the new tariffs could increase the cost of each car by thousands of dollars and add billions of dollars to the costs of automakers and suppliers.

Swamy Kotagiri / South China Morning Post

Magna has already faced issues such as union strikes, semiconductor shortages, and lower-than-expected electric vehicle demand. In the face of Trump's impending "tariff stick," Kotagiri said that Magna is striving to remain as flexible as possible in response, including its electric vehicle structure factory in St. Clair, Michigan. This factory produces battery housings for General Motors' Hummer and Chevrolet SILVERADO EV vehicles. Kotagiri said that if necessary, suppliers can reprogram these swinging robotic arms to assemble frames or engine mounts.

"The world has changed, and flexibility is key," Kotagiri said, emphasizing the need to expand their range of industries and boost future company development through expertise.

The report points out that Magna's success also depends on small and medium-sized suppliers, but their situation may be more difficult.

Laurie Harbour, head of Wipfli's automotive supplier team, said that if you talk to small and medium-sized suppliers who support companies like Magna, you can feel their panic. "Their costs have risen so much, yet their income remains weak. This puts pressure on them."

Kotagiri said that surprisingly, some suppliers do not fully understand the tracking of product flow and cross-border frequency. Trump's tariff policies are stimulating multiple automakers to increase investments in the U.S., and the South China Morning Post believes this will also boost Magna's business in the U.S. The Hyundai Motor Group announced on March 25th that it will invest $21 billion in the U.S. from 2025 to 2028, which is the largest investment the group has made in the U.S. to date. In addition, automotive parts supplier Lear also indicated that it may expand its investment.

However, according to estimates by S&P Global Mobility, the rise in auto costs may suppress U.S. auto sales, reducing annual deliveries in the U.S. by over a million vehicles from the current 16 million.

To achieve new growth, Magna, like many other companies, is looking to China, the world's largest auto market.

Magna has 69 factories in China, employing more than 30,000 people. Magna's Chinese operations account for 13% of the company's total revenue. Kotagiri said, "When Chinese enterprises begin to consider exporting or entering Europe or other parts of the world, we believe we will secure a place."

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Original source: https://www.toutiao.com/article/7488683681687552549/

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