President Trump enacted 25% tariffs on imports from Canada and Mexico, and he increased tariffs on goods from China and Hong Kong. These measures aim to address challenges related to Canadian and Mexican border security and the influx of synthetic opioids. MEMA said the vehicle supplier market faces significant risks due to these tariffs.

Editors Note: As of Wednesday afternoon, President Trump granted an exemption on auto tariffs on Mexico and Canada for one month.

The Economic Role of Vehicle Suppliers

Vehicle suppliers operate in all 50 states, and they remain essential to the U.S. economy. They represent the largest sector of manufacturing jobs in the country. These tariffs raise concerns across the sector, according to MEMA. Suppliers face increasing difficulties absorbing costs, growing businesses, and making investments.

Survey Reveals Sentiment Among Suppliers

A recent MEMA survey reveals that 82% of suppliers expect tariffs on goods from Mexico to negatively impact their business. 68% of suppliers believe that tariffs on goods from Canada will harm operations.

During the first month of tariffs, suppliers anticipate reducing or delaying investments (24%), modifying supply chains (21%), and cutting U.S. jobs (13%).

Long-Term Effects of Vehicle Supplier Tariffs

By six months, suppliers expect the impacts to increase significantly: reducing or delaying investments (57%), modifying supply chains (75%), cutting U.S. jobs (47%), and shifting production outside the U.S. (33%).

The vehicle supplier industry operates within a deeply integrated North American supply chain.

The Role of the USMCA in Vehicle Supplier Tariffs

The United States-Mexico-Canada Agreement (USMCA) was designed to facilitate regional trade and support economic stability. However, these new tariffs represent an unexpected shift for suppliers.

MEMA said it remains eager to continue collaborating with the administration to achieve the shared goals of U.S. job growth and global competitiveness.

Concerns from Vehicle Suppliers

“The community of vehicle suppliers remains fragile from years of industry volatility, workforce shortages, supply chain disruption and the pandemic. Tariffs of this scale place a significant burden on U.S. manufacturers, increasing costs, reducing profitability, impacting American jobs and the industry’s ability to compete globally,” said Bill Long, president and CEO of MEMA, The Vehicle Suppliers Association.