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How does the automotive supply chain work?

9 8
29.03.2025

(NewsNation) — President Trump's 25 percent tariff on imported cars is expected to raise prices for consumers and carmakers, but it could also hurt smaller companies in the vast auto supply chain.

That's because Trump's import tax will also apply to "key automobile parts," including engines, transmissions, powertrain parts and electrical components, according to the White House. Other parts may be added "if necessary."

While the U.S. auto industry is often associated with legacy brands like Ford and General Motors (GM), its network of parts suppliers is far broader.

Vehicle suppliers provide 4.8 million jobs, making it the largest manufacturing sector in the U.S., according to the Motor & Equipment Manufacturers Association (MEMA), the trade group that represents suppliers.

Trump has said his tariffs are aimed at bringing jobs back to the U.S., but experts worry they will have the opposite effect.

"[Automakers] will demand lower prices from these parts suppliers who won't be able to comply, so it's a recipe for lowering employment in the auto industry," John Taylor, an associate professor of supply chain management at Wayne State University in Detroit, said.

The other concern is that countries retaliate with tariffs of their own, which hurts U.S. exporters, explained Jason Miller, a supply chain management professor at Michigan State University.

"We export a tremendous amount of auto parts to Mexico and Canada," Miller said.

The

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