Episode 152
Liberation Day: The Day the US Tariff Bomb Hit the Auto Industry
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It was 6 PM on April 2nd in Detroit, and the news just dropped—a sweeping new tariff announcement from Trump had thrown the automotive industry into chaos. In this episode, Jan Griffiths sits down with Sig Huber, Chief Commercial Officer at Elm Analytics, to understand what this moment means.
Sig, no stranger to disruption — from 9/11 to the Chrysler bankruptcy — doesn’t mince words: this isn’t a storm that will pass. This is a structural shift. One that reshapes global supply chains, tests the financial resilience of suppliers, and threatens the already fragile foundation of North American manufacturing. He calls it Liberation Day — a moment that might free the US from offshore dependencies but at a massive cost.
Together, they unpack how this announcement differs from past crises. This time, there’s no clear playbook. Unlike a chip shortage or a single-supplier failure, this change has tentacles across the globe — from engineering talent and manufacturing capacity to logistics infrastructure and even small businesses.
They talked about stacked tariffs and how they could make it nearly impossible for small—to mid-sized suppliers to survive. With supplier margins already in the red, the clock is ticking. Letters are flying from Tier 1s to OEMs. Some suppliers are refusing to ship without cost coverage. And production schedules are about to get very bumpy.
It’s a high-stakes moment for OEMs, too. While the UAW backs the move and underutilized plants offer some capacity, the timeline to bring new plants online spans 4–5 years. Trump might promise reshoring, but the reality is more complicated.
So, where do we go from here? Jan and Sig spotlight the one path forward: collaboration, trust, and transparency. Leaders must act now to understand their extended supply chains — not just their direct suppliers — and make the financial health of every tier a strategic priority.
This is the wake-up call. This is the moment when leadership—real leadership—will determine who survives and who doesn’t.
Themes discussed in this episode:
- The sudden impact of new U.S. tariffs on the entire auto supply chain
- Why this moment marks a structural shift—not just another industry crisis
- The risk of widespread production disruption if suppliers stop shipping parts
- Why trade policy decisions today could weaken the US auto industry tomorrow
- How stacked tariffs make it nearly impossible for small suppliers to survive
- Why collaboration, trust, and transparency are now non-negotiable
- The urgent need for OEMs and suppliers to understand their full supply chain
- Why this could be a defining moment for leadership across the auto industry
Featured guest: Sig Huber
What he does: Sig Huber is the Chief Commercial Officer at Elm Analytics, where he leverages over 25 years of experience in supplier risk management to support the automotive industry. He previously led global supplier risk efforts at both Fiat Chrysler (now Stellantis) and Toyota, guiding teams across North America, China, Italy, and Brazil. Sig played a key role during Chrysler’s bankruptcy, working closely with the Obama Automotive Task Force and the US Treasury to stabilize the supply base. He also served as a turnaround and strategy advisor at Riveron and currently sits on the board of a major Tier 1 supplier. A licensed attorney, Sig brings legal and operational insight to his work and is a recognized voice in the media on supply chain disruptions.
Episode Highlights:
[02:14] This Is Bigger Than Bankruptcy: Sig’s seen a lot—9/11, COVID, and even Chrysler’s collapse. But this? It’s a structural shift with no clear path forward, and the auto industry isn’t ready.
[07:06 New Plant? Not So Fast: Some plants may have open capacity, but it's limited—and building a new plant is a long, complex process that won’t solve today’s problems.
[10:10] No Parts, No Cars: Suppliers can’t absorb the tariffs—and without OEM support, they’ll stop shipping, setting the stage for disrupted production and a spike in prices.
[11:28] The Supply Base Is on the Brink: Tier Ones are pushing back, red-rated suppliers are bleeding cash, and even a modest cost increase could trigger a wave of shutdowns.
[14:01] Stacked Tariffs, Sinking Suppliers: When steel, electronics, and EU parts all carry separate tariffs, small suppliers can’t absorb the cost—and many won’t be able to keep producing.
[15:53] Know Your Supply Chain: Many companies still don’t know where their parts really come from—and this moment is forcing them to find out.
[19:27] This One’s Different: Rising costs, volume drops, currency risks, credit pressure, and talent shortages—this isn’t just another crisis—it’s a complex, long-term shift that will test every part of the automotive supply chain.
Top Quotes:
[03:29] Sig: “I would say it's comparable to the environment that was around in 2008 and 2009. I was at Chrysler at the time and part of the team that worked on taking the company through its bankruptcy process, and there was chaos there for quite a long time. But there was a path, and there was a legal process to follow. Here, we're in completely unchartered waters because we're in the process of restructuring global supply chains. And the uncertainty, I think now, is even greater than it was then. There, the uncertainty was: What's the legal process? Are companies going to get paid, and is there a path to restructuring and getting out of it? Here, the problems that the industry has to deal with are massive because, as I said before, these are about structural changes — fundamental structural changes in the supply chain.”
[12:20] Sig: “Now, if you look at the current supply base, about 6% to 8% of the suppliers are what we would call "rated red." If there's only a 5% increase in the cost of goods sold—we've done a sensitivity Analysis—if there's only a 5% increase in the cost of goods sold, it will more than double the number of suppliers that are red. It's really going to be a problem. And if you look at those suppliers that are red right now or borderline red, their return on sales is negative right now. Meaning, they're losing money right now on, on every sale they make. And if you start adding extra costs for their sub-components and materials. They are very quickly going to run out of liquidity, being able to afford to even produce the parts. So, it's unfortunately not a great time for the supply base to have this hitting.”
[15:24] Sig: “Where it's really going to be a problem is at the Tier Two level and the Tier One level. That's where we're seeing the greatest chance of financial failure, unfortunately. I have spoken with several OEMs about this topic, and they are aware that the supply base is fragile right now. They just have to figure out how to protect themselves. At the same time, making sure that the suppliers are also stable and able to continue to stay in business and produce parts.”
[23:24] Sig: “There’s so many different angles that make this a really complex problem. It's not just a bankruptcy or some of the other things that we've dealt with over the past decades in the industry. This is really, in my view, unprecedented—at least in my lifetime—an unprecedented structural shift, which is going to challenge everybody in the industry to figure out how to get through it. Collaboration—building trust between the various pieces of the supply chain and the OEM customers—is going to be vital for ensuring that the industry can get through this in the best possible manner.”
[24:29] Sig: “It’s going to be a time when everyone needs to collaborate, and they're going to have to trust each other with the information they're providing, and they're going to have to be as transparent as they can. It's the only way the industry is going to be able to adjust because this is not just a storm that's going to pass. This is a structural shift which is going to take many years to accomplish.”
Mentioned in this episode:
This episode is sponsored by Lockton, click here to learn more
Transcript
[Transcript]
[:This episode is brought to you by Lockton. Lockton redefines business insurance and people solutions with a personal touch. Their global team of 11,000 is driven by independence not quarters to tailor success for your business. Discover the Lockton difference, where your goals become their mission. Independence it's not just how you think, but how you act.
This is a special episode of the Automotive Leaders Podcast. It is 6:00 PM on Wednesday, April the 2nd in the Metro Detroit area, and we are just absorbing what happened with the Trump announcement on tariffs. And joining me to tear into this subject is Sig Huber. Sig is the Chief Commercial Officer at Elm Analytics with a deep history working for both OEMs and suppliers in our beloved auto industry. Sig, welcome back to the show.
[:[00:02:07] Jan Griffiths: Ah, Liberation Day or Termination Day as a Canadians would say, right? But let's start off. Sig, you have been through many crisis and disruptions in your career, what does this feel like to you? What's your initial reaction?
[:[00:02:57] Jan Griffiths: Yeah. You're right. It's big. It has tentacles far reaching around the globe. Typically, when we deal with a crisis in the industry — whether it's a semiconductor crisis or a paint supplier in Japan or a some chemical — we can focus in on it, we can fix it, and deal with it. But this has so many tentacles. Does it feel as bad as maybe the bankruptcy, when you've gone through bankruptcies at OEMs, or does it feel even worse than that?
[:Here, we're in completely unchartered waters because we're in the process of restructuring global supply chains. And the uncertainty, I think now, is even greater than it was then. There the uncertainty was: What's the legal process? Are companies gonna get paid, and is there a path to the restructuring and getting out of it.
Here, the problems that the industry has to deal with are massive, because as I said before, these are about structural changes — fundamental structural changes in the supply chain. And those are changes that cannot be made easily or quickly. And if you want to start resourcing parts to the US, there's probably not enough capacity to resource all of the parts that you would like to resource.
And then, you've got challenges with shortages of engineering resources, and shortages of equipment, and shortages of available property that's available to develop to build new facilities. There's just so many different arms and legs that are attached to this, and all of those things will take a lot of time to work their way through the process, and it's not gonna happen overnight.
And now, we're facing these very significant input cost increases for the entire industry. And these increases, it's still unclear as to how they're going to be paid for and to the extent that they're passed on to consumers via price increases. That's gonna result in probably less volume.
According to a recent study by the Center of Automotive Research, just a $3,000 increase in vehicle prices, new vehicle prices will result in 1.3 million fewer vehicles sold, which of course, decreased volumes on top of the increased input costs is really gonna put a financial strain on the entire industry.
[:[00:06:20] Sig Huber: Yeah. When companies look at establishing a new manufacturing plant — like an OEM looks at establishing a new manufacturing plant — there's more than seven jobs created in the community for every job created at that OEM assembly plant.
And so, it's not just about, to your point, it's not just about the jobs at suppliers and the jobs at OEMs. There's all of the ancillary businesses that are either supporting the plant or just they're in the community. And the workers in those facilities are spending money in those businesses, right? Whether it's pizza shops or dry cleaners, or grocery stores, all of those businesses are potentially gonna be impacted by this.
[:[00:07:28] Sig Huber: Yeah, I think there is some open capacity. There's probably 20 or 30% of open capacity, but it's in pockets. There's where there's open capacity and there's some pockets where there's no capacity, and all of that is gonna have to get sorted out and figured out.
The other thing that may happen is there's been capacity reserve for electric vehicle production. Volumes of those electric vehicles is not materializing at the rate that was initially thought. So, maybe some of that capacity then gets converted back to more traditional ICE vehicles to create some additional capacity.
[:[00:08:25] Sig Huber: Yeah, it's a really complicated process, and it starts with a site selection by the company, and as they go out and look for sites and they contact communities, one of the most important things is finding a piece of property that's suitable for a manufacturing plant.
You don't want homes, or schools nearby, or other things where people could complain about noise and traffic because there's a lot of congestion and traffic that is involved, for example, with an OEM assembly plant.
You have not only the workers coming and going, but you've also got all the trucks delivering parts and taking the finished vehicles to their destinations. And it's not a type of environment that you want to be in a residential type of neighborhood. And so, you have to find the property and those properties aren't assembled in those communities, the communities have to go out and talk to landowners and assemble the parcels together to make a contiguous property that would be suitable.
And then, you're gonna have to bring in infrastructure like roads. You're gonna have to bring in rail, you're gonna have to bring in natural gas and water and electricity. There's a lot of infrastructure that's required just to support those plants, and all of that takes a lot of time. And then, you've got permitting for water, for air, and others. And you're probably talking four to five years minimum from the time that an OEM has an idea to build a plant to the time that it's actually producing vehicles. It's a very long and complex process, an interesting process, great process for the communities that get these facilities, but it takes a long time. And it's not gonna happen overnight and it's not gonna happen, in my view, during the term of President Trump's presidency.
[:[00:10:22] Sig Huber: Yeah, they're gonna have to pass some on. The question is what's gonna happen with the suppliers?
[:[00:10:27] Sig Huber: Because the suppliers — and I've talked to a lot of the CEOs recently — they cannot handle the financial impact of these tariffs, even a little bit. And so, what they're saying to their OEM customers is they're just not gonna ship parts unless they get commitments that the full impact of the tariffs are going to be taken care of by the OEMs.
And of course, if that happens, then you're gonna have choppy production schedules because you're gonna have some parts and sometimes you're not gonna have parts. And so, it's gonna be a little bit like the early days in COVID when companies were trying to start up and it was a very choppy production. You're gonna have the same types of things.
And then, the OEMs have a little bit of inventory on the lots right now. They've been pulling ahead vehicle production. But once those vehicles are sold in a month or so, then you're gonna have situations where you've got the increased prices having to be passed on to consumers, which again, can impact the demand of those vehicles.
[:[00:11:58] Sig Huber: I think so. Our company tracks financial data for both public and private automotive suppliers, and our current database shows that the supply base overall is not very strong. So, this is hitting at a time when the supply base is not fully prepared financially to be able to handle it. Now, if you look at the current supply base, about 6% to 8% of the suppliers are what we would call "rated red."
If there's only a 5% increase in the cost of goods sold—we've done a sensitivity Analysis—if there's only a 5% increase in cost of goods sold, it will more than double the number of suppliers that are red. It's really gonna be a problem.
And if you look at those suppliers that are red right now, or borderline red, their return on sales is negative right now. Right now—meaning, they're losing money right now on, on every sale they make. And if you start adding extra costs for their sub components and materials.
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They are very quickly gonna run out of liquidity, being able to afford to even produce the parts. So, it's unfortunately not a great time for the supply base to have this hitting. Probably never would be a good time, but this is especially a time when the supply base is vulnerable, and it'll be a really good test of the resilience of the supply base that I talked about earlier.
It's proven itself over and over again, but this is, as I said, this is a structural shift. This is beyond just a little storm or even a big storm that's coming their way. This is a structural shift, which is gonna take a long time to sort itself out, and it's gonna be very challenging for everyone in the industry.
[:Then, if you have a product from Germany, and that's subject to the EU tariff, which is 20%—so you add all of that up—there's no way a small company, operating on slim margins or even no margin, to your point, in the industry right now, can survive this. They have got to raise the flag now, today, or tomorrow morning. They're not gonna be able to bring product if they don't have inventory already in their system, in the pipeline. They cannot produce.
[:[00:15:53] Jan Griffiths: Supply chain leaders at the Tier One level, at the tier two level—one of the things that they've been grappling with lately is visibility into that supply chain. Because we all know it's not as easy as everybody thinks to go all the way down through the tiers in your supply chain and understand exactly where every product comes from. What is the country of origin?
So, there's that level of transparency that you need in the supply chain, but you also need to understand the financial stability of your suppliers as well. So, if there's one benefit or one good thing coming out of this Sig, it is putting a spotlight on the need to really know your supply chain, isn't it?
[:So, it'll be interesting to see how that plays out — whether or not suppliers are willing to provide that information, whether companies are willing to collaborate more closely in order to generate trust. Because collaboration can only happen if there's trust on both sides of the relationship. And so, that is gonna have to be developed because it's inconsistent now. Some companies have trust with their supply base, and some companies don't—and that is going to be imperative. The companies, starting at the OEM level, are collaborating closely and are developing trust with their suppliers.
[:[00:18:22] Sig Huber: It's hard to say because this is a very complicated matter, and to the extent that there's parts being imported from Japan, they're gonna be subject to those tariffs, which are 24%, and that's very expensive now.
Toyota—I used to work at Toyota—and Toyota has been making an effort on localization of parts for a very long time. Going back decades. They've been trying to localize as many parts as they can, but they still have exposure with parts coming from the APAC region. They also import a lot of vehicles—still from the APAC region, and specifically from Japan.
And so, overall, Toyota is gonna have some challenges because this is a very complicated issue. Now, to the earlier point, their ability to collaborate, their trust, their mutual trust with suppliers—is very high, along with Honda and a few of the other OEMs as well, and I think that definitely bodes well for their ability to manage this situation. But this is not going to be easy for anybody.
[:[00:19:40] Sig Huber: So, this is not just a storm that's gonna blow over. This is a fundamental transformation of supply chains that's occurring.
It's a structural shift in the industry. It's gonna take a lot of time to work itself through, and there's a lot of different angles that are gonna impact the industry—both suppliers and OEMs.
So, the one that everyone is, of course, talking about are the tariff impacts with respect to the costs. So, you've got these immediate cost increases for materials and sub components, and all of those costs are gonna have to be somehow shared or passed along to the ultimate customer in order for the industry to get through it.
But it's not just about cost, because there's going to be I implications on volume, right? There's gonna be short-term implications on volume, because as suppliers either stop shipping—because they don't want to absorb the cost of the tariffs and they don't have an agreement with their customer—that's gonna create very choppy production schedules, like we had on the start of COVID. And that's gonna create volume shortfalls, which are in turn going to aggravate the financial impacts of the tariffs.
Then, a month or two into the future, as vehicle sales start to drop—because vehicles prices have increased—then you're gonna have more continued and long lasting volume declines, which are going to again exaggerate the financial impacts of the tariffs from a cost and financial perspective.
Then you've got questions around currency. What's gonna happen to the US dollar? Is US dollar gonna get stronger? Initially, maybe. But once there's retaliation—which we'll probably find out about tomorrow—and other countries start retaliating, maybe the dollar starts to weaken after that. We don't know what's gonna happen. But that's an unknown, which is complicated, and that will have a financial impact specifically on companies that have an international footprint.
Then you've got issues with lenders. How are the lenders gonna respond to this? Right now, there's been an environment over the past—I would say three to five years—maybe since we came out of COVID, where lenders have been lenient. And when companies have violated their lending covenants, they've been willing to—what they call—amend and extend those agreements.
Are those lenders now gonna start looking at those covenant violations a lot more seriously and start shutting off working capital lines of credit when companies are out of compliance with their loan covenants? That's another shoe that may drop.
And then you've got things like engineering shortages, right? So, if you're gonna have to resource a bunch of parts, and if you have to validate those parts—or redesign them, or move to alternative materials that aren't subject to tariff—there aren't enough engineering resources in the industry right now to be able to manage any of that workload, let alone a tsunami of everybody trying to do it for every part all at once.
So, there's so many different angles that make this a really complex problem. It's not just a bankruptcy, or some of the other things that we've dealt with over the past decades in the industry.
This is really, in my view, unprecedented—at least in my lifetime—an unprecedented structural shift, which is gonna challenge everybody in the industry to figure out how to get through it.
And collaboration—building trust between the various pieces of the supply chain and the OEM customers—is gonna be vital for ensuring that the industry can get through this in the best possible manner.
[:And that's OEMs to Tier One, to Tier Twos—all the way through. It cannot be a situation where you turn around and send out a letter to all your supply base—a form letter that says," Dear valued supplier, basically, we're not paying the tariffs. You get to eat it." This is not the time for that letter. Right, Sig?
[:[00:24:51] Jan Griffiths: Yes, yes. And there it is—collaboration, trust, and transparency is the way through this. Sig, thank you so much for joining me today.
[:[00:25:06] 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 clicking on the link below. And remember, stay true to yourself, be you, and lead with Gravitas, the hallmark of authentic leadership.
