U.S. Auto Industry Groups Urge Trump to Reconsider 25% Tariffs on Auto Parts, Warning of Layoffs and Supply Chain Disruptions
Six major U.S. automotive industry groups, including the Alliance for Automotive Innovation and the National Automobile Dealers Association, have urged former President Donald Trump to reconsider his proposed 25% tariffs on imported auto parts, set to take effect by May 3. They warn the tariffs could cause production disruptions, layoffs, and bankruptcies, destabilizing the automotive supply chain and threatening millions of jobs. The groups argue that rerouting supply chains is complex and time-consuming, and the tariffs could increase costs by over $100 billion, raising vehicle prices and reducing sales.
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04/22 21:28
U.S. Auto Industry Groups Urge Trump to Reconsider 25% Tariffs on Auto Parts, Warning of Layoffs and Supply Chain Disruptions
Six major U.S. automotive industry groups, including the Alliance for Automotive Innovation and the National Automobile Dealers Association, have urged former President Donald Trump to reconsider his proposed 25% tariffs on imported auto parts, set to take effect by May 3. They warn the tariffs could cause production disruptions, layoffs, and bankruptcies, destabilizing the automotive supply chain and threatening millions of jobs. The groups argue that rerouting supply chains is complex and time-consuming, and the tariffs could increase costs by over $100 billion, raising vehicle prices and reducing sales.
Industry Groups Sound Alarm Over Tariff Fallout
In a letter dated April 21 and addressed to U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer, the heads of six leading automotive trade organizations outlined their concerns over the impending 25% tariffs on imported auto parts. The signatories include the Alliance for Automotive Innovation, American International Automobile Dealers Association, Autos Drive America, MEMA Original Equipment Suppliers, National Automobile Dealers Association, and the American Automotive Policy Council.
The letter warns that many auto suppliers are already financially strained and would be unable to absorb the cost increases imposed by the tariffs. “Most auto suppliers are not capitalized for an abrupt tariff-induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy,” the letter states. “It only takes the failure of one supplier to lead to a shutdown of an automaker’s production line.”
The coalition represents a broad swath of the U.S. auto industry, including franchised dealers, original equipment manufacturers, and parts suppliers. Together, they claim to support 10 million American jobs and contribute $1.2 trillion annually to the U.S. economy.
Tariffs Set to Take Effect by May 3
Former President Trump announced earlier this month that he intends to impose 25% tariffs on imported auto parts by May 3. The move is part of a broader trade policy initiative aimed at encouraging domestic manufacturing and reducing reliance on foreign supply chains. Trump has suggested that some automakers may receive temporary relief if they demonstrate efforts to shift production to the U.S.
“I’m looking for 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 on April 14.
Despite this potential flexibility, industry leaders remain deeply concerned about the immediate impact of the tariffs. They argue that rerouting global supply chains is a complex and time-consuming process that cannot be accomplished overnight.
“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. This will take time,” the letter emphasizes.
Ripple Effects Across the Supply Chain
Auto executives and analysts have warned that the tariffs could have a cascading effect throughout the industry. A single supplier’s failure could halt production lines at major automakers, leading to widespread job losses and economic disruption. The industry’s experience during the COVID-19 pandemic, when supply chain breakdowns led to factory shutdowns, serves as a stark reminder of the fragility of the system.
According to research cited by the industry groups, the tariffs could result in increased costs of more than $100 billion across the sector. Vehicle prices—both new and used—are expected to rise, and auto sales could drop by millions of units.
Dealers are already bracing for the fallout. Some have begun promoting “tariff-free” vehicles as a short-term sales tactic, hoping to attract cost-conscious buyers before prices climb further. However, industry observers note that such strategies are unlikely to offset the broader economic impact of the tariffs.
A Rare Unified Front
The joint letter marks an unusual moment of solidarity among industry groups that typically advocate separately. The organizations rarely, if ever, sign on to a single message, underscoring the gravity of the situation.
“This is not a typical lobbying effort,” said one industry official familiar with the discussions. “The fact that these groups are coming together shows just how serious the threat is to the entire automotive ecosystem.”
Notably absent from the coalition are electric vehicle manufacturers such as Tesla, Rivian, and Lucid, which are not represented by the participating trade groups. However, the broader industry consensus remains clear: the proposed tariffs pose a significant risk to U.S. automotive production and employment.
Broader Economic Uncertainty
The proposed auto parts tariffs come amid a broader wave of trade policy changes under Trump’s “Liberation Day” tariff program. Businesses across multiple sectors have reported heightened uncertainty, with some executives warning of reduced investment appetite and potential recessionary pressures.
Retailers and manufacturers alike have expressed concern over the destabilizing effects of the tariffs. In recent weeks, Trump has met with executives from major companies, including Walmart and Target, as they seek relief from the sweeping trade measures.
Meanwhile, foreign governments and international firms are also responding to the shifting trade landscape. The European Union is reportedly considering export restrictions on U.S. goods if trade negotiations fail, and companies like Toyota are reevaluating their supply chains to mitigate the impact of U.S. tariffs.
Industry Awaits White House Response
While Trump has indicated a willingness to reconsider the auto parts tariffs—similar to recent relief granted to the consumer electronics and semiconductor sectors—no formal exemptions have been announced. The auto industry groups are urging the administration to act swiftly to prevent irreversible damage.
“The upcoming levies could jeopardize U.S. automotive production,” the letter concludes. “We urge the administration to reconsider this policy before it’s too late.”
As the May 3 deadline approaches, the industry continues to lobby for a delay or rollback of the tariffs, hoping to avoid a repeat of the supply chain chaos experienced during the pandemic.
