On March 5, President Donald Trump gave automakers a one-month exemption from tariffs on goods originating from Mexico and Canada, which had been implemented the day before.
Under the exemption made at the request of Detroit’s Big Three automakers, vehicles that comply with the constraints implemented under the United States-Mexico-Canada Agreement (USMCA) will temporarily be exempt from the cross-border levies until April 2.
During a press briefing, White House press secretary Karoline Leavitt said that the President implored the CEOs of Ford (F) , General Motors (GM) and Stellantis (STLA) “to start investing, start moving—shift production here to the United States of America, where they will pay no tariff.”
A worker fits a grille onto a Ford Bronco at the Michigan Assembly Plant. Ford is reevaluating its supply chain strategy amid tariff threats.
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According to a recent report by Automotive News, Ford has been reassessing and streamlining its cross-border operations, stockpiling USMCA-compliant parts, and telling its suppliers to operate business as usual as it tries to devise a strategy against the tariff threat.
As per a March 14 memo to its suppliers seen by AutoNews, Ford chief supply chain officer, Liz Door said that the Blue Oval is “strategically stockpiling components where it is cost-effective and parts that are not pending engineering changes” before the deadline.
The memo also said that the automaker is reviewing its logistics routes and border crossing plans to maximize shipping efficiency.
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“As the situation continues to develop, we require all suppliers to continue shipping parts in accordance with existing contractual terms, including pricing and delivery schedules,” Door said.
“We ask that you continue to utilize your best commercial efforts and encourage your team to take all possible measures to minimize the impact to your business and Ford.”
Under the USMCA rules, imported fully-assembled cars coming into the U.S. from Canada or Mexico must be built with at least 75% of their parts originating in North America (U.S., Canada, or Mexico) to qualify for tariff-free border crossings. Otherwise, they face a 2.5% levy.
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However, the parts that go into the finished cars are another can of worms. After the one-month extension for USMCA-compliant goods is lifted, the question of who absorbs the brunt of the import levies has been a source of tension between some suppliers and automakers.
Executives at auto parts suppliers have told Crain’s Detroit that suppliers of varying sizes to automakers have exchanged claims of force majure, demands for revised purchase orders, and flat-out refusal to ship parts unless customers cover tariffs.
Other Detroit Big Three automakers, including Ford rivals General Motors (GM) and Stellantis (STLA) , have been extensively reviewing their supply chains in recent weeks as the tariff threat can have a financial impact.
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Butzel Long auto attorney Mitchell Zajac told Crain’s that suppliers already calculate tariff duty in their cost-benefit analysis since USMCA rules gave single-digit duty costs between 2.5% and 6% for non-North American imported parts.
“There’s an equation where you can build in 5% or 2.5% duty into your margins or into your cost, but the supply chain and automotive industry doesn’t carry 25% margins. So that hit is significant,” he said.
In Ford’s memo, Door said the automaker “remains committed to working collaboratively with all stakeholders to minimize disruptions and ensure the best outcomes for our suppliers.”
“We encourage you to continue exploring innovative ideas to improve supply chain resilience in the mid-to-long term.”
The Ford Motor Company trades under the ticker F on the New York Stock Exchange.
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