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Changes in the automotive parts manufacturing supply chain after the implementation of the US tariff policy

14 May 2025

By Nick Lung    Photo:CANVA


The current US tariff policy has had a profound impact on the global trade landscape, especially on the automotive parts manufacturing supply chain. On the grounds of protecting its own industries and reducing trade deficits, the United States has imposed high tariffs on auto parts from China, Mexico, Europe and other countries. This has not only changed the cost structure of the automotive manufacturing industry, but also forced a reshuffle of the global supply chain. In such a policy environment, if exporters want to remain competitive, they must actively adjust their strategies to adapt to the new market realities.

 

1. Significant changes in supply chain structure

Rising costs and increasing competitive pressure

Tariffs have significantly increased the prices of imported auto parts, directly increasing manufacturing costs. American automakers, which originally relied on overseas parts imports, are facing pressure and have to put pressure on upstream suppliers to lower prices or turn to other sources of suppliers. For exporters, this means intensified price competition and squeezed profit margins.

 

Manufacturing base relocation and diversified supply

In order to avoid high tariffs, many auto parts manufacturers choose to move some of their production lines from high-tariff regions such as China to regions with lower tariffs, such as Southeast Asia or Mexico, or even back to the United States, forming a "de-Sinicization" trend. This makes the supply chain, which was originally concentrated in a specific area, more decentralized and complex.

 

Increased pressure on logistics and customs clearance

Changes in tariff policies are accompanied by an increase in customs clearance procedures and strengthened supervision, making the overall logistics process more uncertain. Exporters who fail to adapt quickly may face the risk of cargo delays and additional costs.

 

2. Exporters’ responses

Re-evaluate export markets and product mix

Exporters should carefully evaluate the tariff policies of various export markets and adjust their product lines and export strategies based on cost changes. For example, converting certain high-tariff items into component exports and performing final assembly at the destination can effectively reduce overall tariff costs.

 

Using regional trade agreements to export to third countries

If the product's country of origin is a country that has a free trade agreement with the United States (such as USMCA), exporters may consider setting up transshipment or processing points in these regions to enjoy lower tariff treatment. At the same time, the "third-place export" strategy can also be used to convert the origin of other tariff-favorable regions.

 

Strengthening supply chain resilience and risk management

Exporters should develop diversified supply sources and production bases to avoid high dependence on a single market or source of raw materials. Establishing backup plans and risk warning mechanisms will help to respond quickly to sudden policy changes.

 

Optimize customs declaration and compliance processes

Changes in tariff policies have made customs declaration procedures more complicated. Exporters should strengthen internal compliance training and work closely with professional customs brokers or freight forwarders to ensure the accuracy and efficiency of import and export operations and avoid unnecessary fines and delays.

 

Share tariff burden with customers

Exporters can renegotiate terms with overseas buyers, such as adopting CIF or DDP terms, partially sharing tariff costs or adjusting prices. This move not only reduces unilateral pressure, but also helps maintain stable customer relationships.

 

The U.S. tariff policy has become an important variable affecting the automotive parts supply chain landscape. For exporters, this is both a challenge and an opportunity for transformation. Only by proactively responding, flexibly adjusting, and combining trade, supply chain and operational strategies can we maintain competitiveness and long-term development in a changing global market.

 

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