Auto Suppliers Face Tariff Pressure; MEMA Pushes for USMCA Compliance

With automotive suppliers facing increasing pressure due to tariffs, MEMA is pushing for the conditions of the United States-Mexico-Canada trade agreement to be honored, as well as other provisions to help auto suppliers adjust, according to a report from Detroit News.

Leaders of MEMA shared how tariffs have been impacting their members last Friday with the Automotive Press Association, with import taxes of 25% on steel and aluminum, 25% on certain auto parts, and at least 10% on imports from most countries currently in place.

MEMA’s over 1,000 members have shared dwindling outlooks, with three quarters now expecting worse financial performances for 2025 than at the beginning of the year. 

Additionally, 7% of members have implemented furloughs, 5% have put temporary wage reductions in place, 43% have delayed capital expenditure spending, 38% have restricted travel, and 15% have taken other actions because of tariffs, according to the report.

Collin Shaw, president of MEMA's original equipment suppliers group, shared that over half of MEMA members are less competitive because of tariffs, and 53% are worried about sub-tier supplier distress.

“New orders are down, and costs remain elevated,” said Mike Jackson, MEMA's executive director of research and insights, “and this is a very tough situation for the supplier industry.”

Shaw added that the best path forward is for USMCA to be honored, and for tweaks to be made as needed to maintain industry stability and provide a level playing field for all suppliers investing in the U.S.

“We've all invested for the last 20 or 30 years into the North America supply chain, and every country in USMCA offers something unique and has something to bring to the table to ensure  that, from a competitiveness standpoint, we can compete with the rest of the world,” said Shaw.

The potential pitfalls of concentrating all production in one place were also highlighted by Shaw.

“We have to have that diversified supply chain so that we're not at risk, whether it's a supply chain shock like we saw with tsunamis, or geopolitical tensions like we're seeing today,” Shaw said. “We have to have a diversified supply chain.”

MEMA is advocating for various solutions, including reforms that would help expedite U.S. expansion, retaining the Inflation Reduction Act that grants incentives to manufacturers of U.S. batteries, incentives for research and development, and support to increase skilled tooling talent.