U.S. Tariffs: Impact & Measures for Automotive Suppliers

The introduction of new tariffs by the United States poses significant challenges for companies, particularly automotive suppliers. These measures have a direct impact on global supply chains and, ultimately, on cost structures. To avoid losing track of the situation, it is essential to act quickly and minimize the damage as much as possible.

Take Action Instead of Waiting: How to Cope with the Impact of U.S. Tariffs in 3 Steps

1. Understand what to expect

The first step, the analysis, involves gaining a clear understanding of the current situation and the potential financial burdens. This is achieved through a detailed assessment of the supplier structure, broken down by country and product group based on the relevant customs codes (HS/HTS codes).

In addition, a comprehensive assessment of the total cost of ownership (TCO) should be conducted, comparing customs duties, shipping costs, and handling fees with the costs of local production.

Another essential part of the analysis is the consideration of tax implications. It is important to clarify early on which additional cost items are included in the sales tax base, as tariff-related surcharges are usually taxable. A precise understanding of these aspects is crucial for a realistic assessment of the risk and economic impact of tariffs.

2. Measures to minimize damage and operational adjustments

The second step focuses on active damage control. This involves systematically identifying and implementing ways to reduce tariff burdens.

This includes, for example, optimizing tariff classification (HS/HTS codes) as well as targeted adjustments to product design, manufacturing processes, and site selection — an approach known as “tariff engineering.” Strategic changes in these areas can sometimes significantly reduce customs duties. At the same time, companies should examine whether there are contractual options for passing on tariff costs to customers.

Particular attention should be paid to ensuring that existing tax exemptions can be utilized, provided customers can present valid certificates. Additionally, it is advisable to strategically evaluate alternative supply chain strategies, such as near-shoring or re-shoring, and implement them in the medium term if appropriate.

3. Evaluate strategies and implement them consistently

The third step, decision-making and implementation planning, involves a structured evaluation of various options. This includes developing detailed scenarios that outline clear pros and cons as well as cost estimates. These scenarios should be presented in a decision matrix to ensure transparency and comparability.

Once a decision has been made, detailed operational planning follows: Here, timeframes, capital expenditures (Capex), and required resources must be clearly defined. It is also important to have an accompanying monitoring concept that ensures suppliers provide accurate tariff and tax calculations and that the company can continuously adapt to new regulatory changes.

By consistently implementing these three steps — thorough analysis, strategic damage control, and methodical decision-making and planning—companies are able to actively manage the challenges posed by the new tariffs and effectively minimize financial risks. This is particularly crucial in times of volatile global trade conditions.