How to survive a trade war: auto braces for worst case

Tariff changes under the new Trump government have thrown the global automotive industry into a tailspin. With little warning, the US President has laid out a range of new or increased charges on all sorts of imported products, including vehicles and their constituent parts such as aluminium, steel, and semiconductors. Some of these are in the name of national security (tariffs on China, Canada and Mexico) while others are in response to existing VAT rates (Europe). To further complicate matters, some tariffs were officially implemented only to be temporarily halted mere hours later to allow for further governmental negotiations. For anyone that builds or sells in the US, huge uncertainty clouds the outlook.

“If all these tariffs go into effect, they could be detrimental to a number of industries including—without limitation—automotive,” says Chauncey Mayfield, a corporate attorney and leader of Honigman’s Commercial Transactions Practice Group. “One of the first things that many will be looking for is an exemption or a duty drawback, where you can receive a refund on goods once they are re-exported outside the US. But the problem with these recent announcements from Trump is that there are no exemptions or duty drawbacks. People are preparing for a worst-case scenario.”