Episode 150
Auto Industry Under Pressure: Breaking Down the New Tariffs
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What just happened?
That's the question hanging over the automotive industry after the new administration's surprise announcement: a sweeping 25% tariff on imported vehicles and key auto parts.
To help make sense of it all, Jan Griffiths welcomes Glenn Stevens Jr., Executive Director of MichAuto. Together, they break down what this means for manufacturers, U.S. jobs, and the future of vehicle production in America.
While the intent behind the policy might sound great—more American jobs, stronger borders—the reality is a bit messier. Glenn explains that the auto industry saw changes coming, but not this fast or this broadly. And now, companies are scrambling to make sense of what applies, what doesn't, and how it impacts the bottom line.
They walk through the details of the policy shift: the tariff now hits not just imported vehicles but key parts like engines and electrical components. Glenn clarifies how USMCA-compliant products might catch a break—but only for now.
It's not just about cost. It's about timing. Sourcing and manufacturing strategies built over decades can't be reworked overnight. And while the idea of reshoring sounds patriotic, Glenn and Jan warn against letting nostalgia drive strategy.
They dig into the risk of weakening USMCA partnerships and what that could mean for competitiveness across the region—especially with Chinese automakers like BYD moving fast and taking over the market.
There's talk of "tariff stacking," confusion about who pays, and rising tensions between OEMs and suppliers. Some OEMs are stepping up to collaborate. Others? Not so much.
Through it all, Glenn reminds us of one powerful truth: the auto industry is resilient. From chip shortages to financial meltdowns, it's been tested before and has come out stronger.
This episode isn't just about tariffs. It's about how leaders show up in moments of uncertainty. And it's a reminder that the ones who listen, collaborate, and adapt will be the ones who lead the way forward.
Themes discussed in this episode:
- The real-world impact of sudden tariffs on the U.S. auto industry
- The misconception that tariffs automatically lead to more American jobs
- The massive impact of new tariffs on imported vehicles and auto parts
- Why trade policy decisions today could weaken the US auto industry tomorrow
- The urgent need for supply chain transparency and data-driven decision-making
- How tariff stacking could significantly increase costs across the supply chain
- The risk of damaging OEM-supplier relationships under cost pressure
Featured guest: Glenn Stevens
What he does: Glenn is the Executive Director of MichAuto and VP of Automotive and Mobility Initiatives at the Detroit Regional Chamber. In this role, he provides strategic direction and leadership to promote, retain, and grow Michigan’s automotive and mobility industries. Glenn also leads strategic fundraising efforts and works closely with investors to strengthen engagement and retention. With over 30 years of experience in management, strategy, and operations across multiple industries—including automotive, steel, and capital equipment—he brings a broad perspective and deep industry insight to the role.
Episode Highlights:
[02:12] It’s Not “Good” News—It’s Just News: Description: The new 25% tariff sounds like a win, but the way it’s being done has the auto industry worried about what comes next.
[03:38] It’s Not Just the Cars: The 25% tariff doesn’t stop at vehicles—it now hits engines, powertrains, and more unless you’re playing by USMCA rules.
[07:26] Tariffs Don’t Stop at the Border: Higher import costs are set to ripple through the supply chain, squeezing small suppliers and threatening vehicle production.
[09:36] Not Made in a Day: Decades of global sourcing can’t be undone overnight—especially when the tech, talent, and capacity just aren’t here.
[11:45] Nostalgia Isn’t a Strategy: Wishing for the good old days won’t bring back U.S. manufacturing—especially without a clear, modern strategy to compete globally.
[13:56] The Cost of Going It Alone: When tariffs raise costs across the US, Mexico, and Canada, the whole region loses its competitive edge in the global auto game.
[15:05] While We Tariff, BYD Builds: As China’s BYD scales fast and innovates even faster, the U.S. auto industry risks falling behind—distracted by politics instead of focused on reinvention.
[17:13] The Hidden Cost No One's Ready For: With copper, wire harnesses, and border crossings all in the mix, products may face multiple tariffs multiple times—and it’s the supply base and consumers who’ll feel it.
[19:47] Strained Supply, Strained Relationships: As costs climb, tensions between OEMs and suppliers could rise, too—putting a fragile but critical partnership to the test.
[19:47] Contract or Collaboration? With tensions rising, some OEMs double down on contracts while others open the door to dialogue—one path leads to progress, the other to shut down.
[20:40] Strained Supply, Strained Relationships: As costs climb, tensions between OEMs and suppliers could rise, too—putting a fragile but critical partnership to the test.
[22:24] Strained Supply, Strained Relationships: Tariff chaos is forcing companies to get serious about supply chain visibility, data, and readiness—turning crisis into a much-needed wake-up call.
[25:47] Leading by Listening: Glenn’s approach to leadership? Hit the road, listen hard, and turn industry concerns into action at the policy level.
Top Quotes:
[03:07] Glenn: “We knew there were going to be trade changes, but this is really a curve ball for the industry — one that we anticipated but we're dealing with today. Are more jobs in America and more jobs in Michigan good? Yes. Is border security — which is one of the initial reasons for some of these moves, seems like a year ago now, but it was only a couple of months ago. Is that a good idea? Yes. But the methodology of making these changes, and what it means to the impact for the short term and potentially the long term, has us concerned.”
[12:37] Glenn: “I think we're looking a little bit more isolationist than we have been. But that's not something that just started with this administration. That is something that really started a couple of administrations ago. And is that the right thing to do in a global trade economy? Likely not. Are there forces that we have to reckon with that didn't exist before? Yes. The Chinese automotive industry did not exist 20 years ago. It didn't exist like it does today, five years ago. And so, that's a force we have to reckon with, but it needs to be well thought out. The industry and government have to do this together.”
[14:19] Glenn: “We're absolutely interconnected, and that region — this region — is competitive. It needs to be more competitive, and automation will play a role there, and technology, and advances in even things like AI. And then you look at the USMCA region — it has to be competitive globally. And there's a concern that if you weaken the strength of the three countries together as an operating block of trade companies — let's just talk about automotive, but it's certainly for other sectors of our economy — what does that do to us overall? If input costs are all higher and the vehicle costs more, does that make us globally competitive or less competitive? It makes us less competitive, and that's the concern.”
[18:33] Glenn: “I don't think anyone's anti-tariff. They're strategic tools that can be deployed and utilized, but right now, they are a very large umbrella to raise the revenues of the US Treasury and to drive onshoring overnight, so to speak, and that's not possible. What we really were hoping for — and still hold out hope for — is that there is a reopening of the USMCA, which was stipulated by the agreement in 2026, that we pull that up and work with our trading partners to work out the difficulties or the bugs — and it does need to be updated.
[26:17] Glenn: “We’re trying to really be that voice — that voice that communicates, again, to our federal legislators, to our local legislators, to our policymakers, and everything we can do to be part of that collective voice. We work very closely with the other associations. We have a synergy call that we do once a month with Michigan Manufacturers, MEMA, CADIA, the economic development people, and representatives. Dingell joins that call. Representative Stevens joins that call. Once a month, we get together for 45 minutes to collectively talk about what we should be working on together. So, the collective voice is much stronger. So, that's what we're doing—listening and trying to be that voice.”
Mentioned in this episode:
This episode is sponsored by Lockton, click here to learn more
Transcript
[Transcript]
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th,:[00:02:06] Glenn Stevens: Hi, Jan. Thanks for having me. It's an interesting day today, but I look forward to chatting with you about it.
[:[00:02:50] Glenn Stevens: It's news. I wouldn't say it's good news. We're really dissecting and digesting what's transpired. We anticipated it. We knew there's gonna be a lot of changes with this administration. I don't think we anticipated the magnitude and the velocity of which it's coming at us.
So, we knew there were gonna be trade changes, but this is really a curve ball for the industry — one that we anticipated but we're dealing with today. Are more jobs in America, and more jobs in Michigan good? Yes. Is border security — which is one of the initial reasons for some of these moves, seems like a year ago now, but it was only a couple months ago. Is that a good idea? Yes. But the methodology of making these changes, and what it means to the impact for the short term and potentially the long term, has us concerned.
[:Then, as we dive deeper into the fact sheet that's produced on the White House website, we find that it actually includes certain auto parts, and those auto parts are listed as engines, transmissions, powertrain parts, and electrical components.
So, okay. So now, we've got an expansion of that 25% to be not only on vehicles, but on certain auto parts. Then, in addition to that, on the fact sheet — not included in the press conference, but on the fact sheet — it says Importers of automobiles under the USMCA agreement will be given the opportunity to certify their US content, and systems will be implemented such that the 25% tariff will only apply to the value of their non-US content.
I think I get that, but Glenn, walk us through what that means. Let's take, for example, a vehicle — let's take Bronco. Ford makes the Bronco in Mexico. What does that mean?
[:We produce a lot of vehicles in the US, Mexico, and Canada — in the USMCA regions — but we do import a lot of vehicles. What that means now is all imported vehicles, no matter what country they come from, they have a 25% tariff that will be levied on them. The exception and the exclusion is if that vehicle is produced in Canada or Mexico — USMCA trading partners — the content of those components that are produced in the USMCA region will be excluded, or you can appeal or apply for an exclusion to that.
So, let's come back to the Bronco Sport built in Mexico. If that vehicle has components that come from Mexico, US, or Canada, they will be part of an application to exclude from that 25% tariff. That's our understanding this morning.
[:[00:06:24] Glenn Stevens: Yes, correct.
[:[00:06:51] Glenn Stevens: Right.
[:[00:07:01] Glenn Stevens: For the moment. An extreme example of what would not apply, or an example would be a component manufactured in France. If that vehicle component comes into this country from France, directly into a vehicle, that component is tariffed at 25%. That is not a USMCA compliant component.
[:[00:07:28] Glenn Stevens: Well. I think we have to start at the big picture — vehicle production, vehicle demand. What's gonna happen? We already know that consumer confidence in the United States has taken a hit. So, there are some signals — we've seen that from the key indicator, key reports. We know from talking to dealers — I've talked to some dealers — the showroom traffic has slowed, and that's not a good indicator either.
But now we have 7.68 million vehicles — or a portion of them, for example — vehicles imported directly from South Korea, or Japan, or the UK, and there are about 10 countries that make up the bulk of all of the imported vehicles. Those vehicles are now gonna have a higher cost to that company that is trying to sell that vehicle, and that will be impacted.
I mean, the company has one of two choices: it absorbs that tariff, or it passes that tariff along to the consumer. So, at the high end, we know that we're going to have a problem on the demand side in the vehicle showroom. There are gonna be less products available.
Now, when you look at the supply chain itself and you build it up from the bottom — all of those components, and there are a lot that are not USMCA — will now have a higher input cost into that supplier or that module that's built up, and that's gonna stack up through the system.
Again, companies can pass that through. OEMs and larger tiers can accept those increases, but it's gonna stack up to a higher cost for that OEM to eventually bring that vehicle to market. So, we are concerned about small suppliers — their balance sheets are a lot more fragile. There's always fragility at the small suppliers, even large suppliers. So, we're concerned about that.
We're really not sure, but some of the forecasts are that vehicle production will be decreased in the US because of this, which flows back through the supply chain. That's a concern about jobs and balance sheets. So, there's ramifications here that we're looking at.
[:Now, one of the primary reasons is cost. We source in a low-cost country for a reason — because of cost — but we also source for other reasons such as capacity, availability, and technology. This announcement covers electrical components, which is a huge umbrella that can cover a lot of different things. In some cases, that technology just isn't available here.
It's coming from China, from Taiwan — it's coming from other countries. So, to bring that technology here will take at least two, three, four, maybe even five years.
[:Is there plastic injection molding capacity? Yes. Not as much as there used to be, but there is. I don't like to use the word "commodity," but for shoot-and-ship parts and things like that, you can move production. But when you get into complex electronics, electrical components, forgings — the United States does not have a lot of capacity for forgings.
And this has evolved over decades. And so, to be able to change these things — first of all, it's a supply and demand situation. Second of all, is there labor available, particularly in the skilled trades? It takes time to move it. And there's also process. I like to say that the. The vehicle — the car, or truck, or the SUV — is the most high-tech consumer product on the face of the earth that has to start every time, and it has to keep their passengers safe.
That's why we have the controls we have, in all the processes and checks and balances. Things do not move overnight.
[:We're looking back instead of looking forward. I would love to see us look forward to say, "Okay, what does US manufacturing look like? What should it look like to be globally competitive in today's marketplace?" So, I get this sense we're looking back instead of forward. What do you think?
[:The Chinese automotive industry did not exist 20 years ago. Really, literally, it didn't exist like it does today, five years ago. And so, that's a force we have to reckon with, but it needs to be well thought out. Really, the industry and government has to do this together.
In the short term, we look at the supply and demand situation. I think steel and aluminum — that's another series of terrorists we're dealing with right now.
There is capacity in American steel making, and so maybe there's some things that can be done there to move things onshore. Aluminum's different. You know, primary smelting of aluminum is not done in this country because it's so energy intensive. Most of it in North America is done in Canada because they have hydroelectric power.
So this is — I guess the reason I'm bringing this all up — it just demonstrates how complex this supply and demand equation is, and how it needs to be well thought out, and it cannot change overnight.
[:[00:14:03] Glenn Stevens: Well, there's a concern there.
I mean, let's look at just our region. We look at Ontario and Michigan as basically seamless. An engine built in Michigan is used in a Windsor assembly plan. An engine built in Ontario is used in an F-150 assembly plant. So, we're absolutely interconnected, and that region — this region — is competitive. It needs to be more competitive, and automation will play a role there, and technology, and advances in even things like AI.
And then you look at the USMCA region — it has to be competitive globally. And there's a concern that if you weaken the strength of the three countries together as an operating block of trade companies — let's just talk about automotive, but it's certainly for other sectors of our economy — what does that do to us overall?
If input costs are all higher and the vehicle costs more, does that make us globally competitive or less competitive? It makes us less competitive, and that's the concern.
[:Do you feel that?
[:Well, look at that company now. That company is not only huge and growing. They went from 400,000 in sales to 4 million in sales, literally, in the last four years. But they're innovative. They're very vertically integrated, but they're very innovative in how they use the tools to bring vehicles to market faster, cheaper, stronger, safer. And that's what we're competing against.
So, if we don't have focus and our eye on a ball to be able to compete with that — let's just use Ford for example — they know what they're up against. Jim Farley's been very, very vocal about this. He knows what he has to do, and yes, this distracts us from this. We have had complete paralysis and delay in product investment, capital investment, products have been delayed, and now everybody's gonna have to step back and look at their manufacturing base. All the meanwhile, we potentially get less competitive.
[:Yes, and there's talk now about more tariffs coming on copper, and that's gonna have a huge impact because, as we all know, copper is the major component in a wire harness — and that's not just the auto industry. All your appliances. All of those — well, I wouldn't say all of those, but a significant portion of those wire harnesses are made in Mexico — and if we have a tariff on copper plus a tariff on products coming from Mexico, we're gonna be into this world of a new term: Tariffs stacking.
Yes, products are gonna be subject to multiple tariffs, but they also may be subject to multiple tariffs multiple times as they cross the border several times. So, this could be an enormous impact not only to the supply base but to the consumer.
There's still a lot of misunderstanding out there about who pays the tariff. You know, to be clear, the company that imports the product pays the tariff. They get to decide if they are gonna pass it on to their customer or not. So, will the consumer be impacted? Yes. How much? We don't know yet, but it's happening, isn't it?
[:NAFTA had was long overdue to be updated. Before that, there was a Canada-US agreement that didn't even include Mexico. So we've evolved, and we've evolved even more. The issue of Chinese components and vehicles potentially coming through Mexico — that needs to be addressed in USMCA. So, we're hoping that that's the process.
This is not the way we had anticipated things. The sky is not falling. This is a resilient industry that has been through a lot. We're going to figure this out, but right now there's gonna be some potential short-term implications, which hopefully do not lead to permanent damage.
[:[00:19:52] Glenn Stevens: I mean, there's the potential for that — there always is. You know, you've been in this industry a long time and been on one side of the table, and you know that they have to work together. Seventy to seventy-five percent of the components that make up a vehicle come from the suppliers. A large portion of the R&D and new technology comes from the suppliers.
It's a symbiotic relationship that is often strained — we know that. I think this has the potential to cause a lot of strain, because if these input costs go up and they get passed up the supply chain, there's. Gonna be a lot of disagreements about that. There's maybe gonna be some rejection about that — that causes strain.
I don't know what's gonna happen. Hopefully it doesn't, 'cause it's all hands on deck for this industry to figure out how do we make this work as best we can.
[:And that's a bit of a stick-your-head-in-the-sand kind of approach. You know, I think you've got to be open to negotiations. You can't just blindly say, "Nope, not talking," You know, "Ship to the contract, that's it." You can't take that attitude. This has got to be a collaborative effort between OEM and supplier so that we can get through this.
Otherwise, we're gonna end up in a typical type of disagreement — suppliers will stop shipping — and then we'll bring the industry to a halt. And we definitely do not want that to happen.
[:Our organization, MichAuto, reached out to all of our congressional delegation. We have seven Republicans and six Democrats in our house of Representatives delegation, and we obviously have two Democratic senators. We're communicating with them all the time about what the implications and ramifications are.
Same thing with the White House, and I know that the big OEMs and big suppliers are in D.C. doing that too. I'm still thinking and hoping that calmer heads will prevail, but I also heard the president say very clearly that these are not going to go away anytime soon. And so we now have the open issue of Canada and Mexico. We have the steel and aluminum, we have the import on all imports, and then we have the reciprocal. So, we have a lot of things going — to use your phrase — that are stacking.
[:Because now, in every executive leadership team, in every executive leadership conference room in this industry today, they're looking at the head of supply chain and purchasing, going, What does this mean? So, in order to be able to answer that question — because we need to know in terms of cost: when is it gonna hit? How much is it? How is it gonna impact the P&L? How's it gonna impact the balance sheet? Ugh. So, many questions.
But in order to answer those questions, you have to have visibility all the way through your supply chain — through the tiers — and you have to understand how many times the part crosses the borders.
Understand exactly what level of tariff applies to what classification of the product is. Are your products in the right tariff classification? I mean, so many questions. Tariff engineering is a thing now — to make sure that your products have the right classification, right? So, all of these questions have to be asked and answered very quickly, and that requires you to have that visibility and to have the technology and the data analytics in place to be able to pull that data.
So, it is gonna focus us on true supply chain transparency like we've never had to experience this before. Because these things are changing. You know, we know what this is today, but it could be different tomorrow. And we know there's a new set of tariffs coming on April 2nd. So, I do see that — I'm trying to look for the positive here, Glenn. I do see that as one positive.
[:They are resilient people who've been through a lot. I mean, just look what we've been through just in the last several years — with the chip shortage, with COVID — and it wasn't that long ago that we had the financial meltdown. What companies have to do — and I know they're doing this — is ask: How do I make myself better right now?
How do I roll my sleeve out? I gotta deal with this. I can't make this go away. How am I gonna be better to be able to compete? They're already thinking like that. It's like that old adage: Don't waste a good crisis, right? And so, I always subscribe to these inflection points that hit us and think about what does that mean?
And Andy Grove wrote a great book — the founder and chairman of Intel — called Only the Paranoid Survive, and he talks about inflection points. That's a major force of change that impacts a business. That is what we have again right now. So, how do you figure out how to take the upper trajectory on that inflection point and not be a victim of it?
Because you can't stay the same — that's not how things work. So I think we have the opportunity that you laid out, and I think we have the opportunity. The challenge in front of us is: How do we make ourselves better, and how do we compete to win?
[:[00:25:58] Glenn Stevens: Well, the first thing I'm doing is listening. I have been — I usually am. I mean, I live in, some people say, "Where do you live?" And I say, "I live in my car."
I've been out visiting a lot of companies and talking to people one-on-one to hear what they're doing, how they're reacting. So, the first thing you do is listen. What we're trying to do is be a resource. We're trying to really be that voice — that voice that communicates, again, to our federal legislators, to our local legislators, to our policy makers, and everything we can do to be part of that collective voice.
We work very closely with the other associations. We have a synergy call that we do once a month with Michigan Manufacturers, with MEMA, with CADIA, with the economic development people, representatives. Dingell joins that call. Representative Stevens joins that call. Once a month, we get together for 45 minutes to collectively talk about what we should be working on together. So, the collective voice is a much stronger. So, that's what we're doing — listening and trying to be that voice.
[:And I would say, from a leadership perspective, this is an opportunity for great leaders to shine. This is an opportunity to step up, bring calm to the chaos and the crisis. Are things crazy? Is there uncertainty? Do you know what tomorrow's gonna bring you? You don't know. But as a leader, you can bring a sense of calm and confidence by, first of all, being truly authentic and saying, "Look, I dunno what's gonna happen tomorrow but one thing I do know is that we are in this together, and we are gonna find a way through it."
And I think with that mindset we will — we will get through this, and we will come out stronger and a better automotive industry than before it. It's just gonna be a little challenging along the way. But Glenn, it has been great having you on the show today. Thank you for your time, and I'm sure we'll be bringing you back.
[:[00:28:19] Jan Griffiths: Thank you for listening to the Automotive Leaders Podcast. Click the listen link in the show notes to subscribe for free on your platform of choice. And don't forget to download the 21 Traits of Authentic Leadership PDF by right clicking on the link below. And remember, stay true to yourself, be you and lead with Gravitas, the hallmark of authentic leadership.
