Tariff Talk: This Week's Headlines

The U.S. auto industry remains in a state of flux as the federal government’s tariff measures continue to ripple through global supply chains and domestic production lines. The 25% tariff on imported vehicles and non-USMCA auto parts remains in effect, placing pressure on both foreign automakers and U.S.-based companies that rely heavily on overseas components. Parts and vehicles that comply with the U.S.-Mexico-Canada Agreement are exempt, but compliance has proven to be a logistical and financial hurdle for many.  

In other news, here is a synopsis of excerpt & headlines that caught my attention this week:

• The big news Sunday was the U.S. and China said they will temporarily lower taiffs on each other’s products in a dramatic ratcheting down of trade tensions that buys the world’s two largest economies three months to work toward a broader agreement. The combined 145 percent U.S. levies on most Chinese imports was reduced to 30 percent including the rate tied to fentanyl by May 14, while the 125 percent Chinese duties on U.S. goods will drop to 10 percent, according to officials in a briefing Monday in Geneva.  It was unclear what impact the 90-day truce would have on auto imports and exports between the two countries. The U.S., beginning with President Donald Trump’s first term, has effectively locked out Chinese-made EVs with steep tariffs, while China ratcheted up extra tariffs on U.S.-made vehicles in April.  The impact of this deal will take some time, but I expect this President will be very resistant to China-made EVs.
• Nissan is considering shifting Sentra production from Mexico to its underused factory in Mississippi, a supplier told Automotive News.  This would allow Nissan to avoid paying the 25 percent import tariff on its No. 2-selling vehicle in the U.S. if a deal is not made.  The Sentra sedan accounted for nearly 20% of Nissans delivered in the U.S. last year, with sales of 152,659. It’s among the trio of nameplates assembled in Mexico, that make up almost a third of the brand’s U.S. volume. Nissan’s U.S. Chairman Christian Meunier is tightening corporate spending and shrinking dealer programs. “Tariffs are a headwind, but they also present a good opportunity for Nissan to accelerate localization,” he said.
• Subaru will rethink its electric vehicle strategy, including the timing of investments, amid new global uncertainty about future emissions regulations.  CEO Atsushi Osaki said the overall direction toward electrified vehicles remains unchanged, but the pace of Subaru’s EV rollouts and the amount of money it invests into the technology is under review.
• Executives and analysts have warned for months that tariffs will lead to fewer vehicles being produced in North America. That seems to be the case, data shows.  The region will produce about 126,000 fewer vehicles this quarter because of tariffs than it otherwise would have, according to an estimate by AutoForecast Solutions. The estimate accounts for production changes announced by automakers through May 1, including both cuts and planned increases.   It illustrates the effects tariffs are having on the industry as automakers respond to rapidly changing trade rules that President Donald Trump says are meant to return manufacturing to the U.S.