Car Industry Feels ‘Distress’ as Suppliers Face Tariffs

The White House has argued its tariffs were designed to help the American car industry.

But as the Financial Times (FT) reported Sunday (Oct. 12), the levies have ushered in turmoil for the sector, with the three biggest carmakers — Ford, General Motors and Stellantis — now projecting a combined $7 billion tariff-related hit to their 2025 earnings.

At the same time, thousands of companies that supply these auto giants are struggling with supply chain disruptions, higher prices on products and diminished cash flows, the FT added.

The report cited the example of Michigan-based Team 1 Plastics, which saw the price of a $300,000 injection molding machine imported from Japan jump 15% thanks to the tariffs.

“That’s real money where I come from,” Gary Grigowski, Team 1 Plastic’s vice president and co-founder, told the FT. “It’s a cost that has to be recovered somehow.”

Michigan, the report added, is home to more than 1,000 companies that supply the auto industry with everything from steering columns to windshield wipers. And while the tariffs were designed to promote U.S.-based manufacturing, industry executives told the FT that building a car in America depends on global supply chains.

“As much as we want to build walls around ourselves here and live in this protected box, it’s impossible,” said Mary Buchzeiger, CEO of Lucerne International, which forges and casts vehicle components.

“We just don’t have the manufacturing footprint any more ... to produce everything we need to consume here in the U.S.”

As covered here last week, while tariffs have driven up costs and made logistics more complicated, they have also spotlighted how resilient merchants can be when incentives “shift toward efficiency and control.”

“Goods producers, which includes retailers and tech firms, report higher input costs and delivery delays, but they also point to opportunities to localize sourcing and harden supply chains against further shocks,” that report said.

Research by PYMNTS Intelligence finds that 92.6% of goods firms report higher raw-material costs, and nearly three-quarters said they were seeing shortages or delays in getting certain products. At the same time, 70.4% see tariffs as a chance to support the local economy, and 40.7% say tariffs have improved their supply chain resilience.

“That mix of strain and adaptation explains why many merchants are rebalancing from single-source imports toward multisourcing and near-shoring, even when near-term costs are higher,” PYMNTS wrote.