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Tariffs Costs Loom Over Auto Sector; Advance Revamps Supply Chain By Mark R. Long

The U.S. auto industry is facing an injection of new costs into the sector's highly integrated North American supply chain, after new 25% tariffs on imports from Mexico and Canada went into effect on Tuesday .

WSJ's Christopher Otts writes that these new levies, combined with coming 25% tariffs on imports of steel and aluminum, so-called reciprocal tariffs and sector-specific tariffs, all add up to higher costs for foreign and U.S.-built vehicles.

Even domestic cars have lots of parts from abroad, and the levies on Canada and Mexico alone could add about $3,000 to the average price of a new vehicle, analysts estimate. At $44,000, that average price already is up by 25% since 2019.

About 23% of new passenger vehicles sold last year in the U.S. were assembled in Mexico or Canada. Carmakers including Volkswagen, Stellantis, Honda and General Motors have above-average reliance on those two countries. Tesla, which is run by Trump ally Elon Musk, builds U.S.-sold cars domestically, but about a fifth of their parts come from Mexico.

It isn't clear what share of the new costs would be absorbed by automakers and their suppliers, compared with what is passed down to buyers. It also isn't clear whether the administration will grant exemptions for vehicles that comply with the U.S.-Mexico-Canada Agreement, Trump's free-trade pact.

China retaliated with tariffs and controls on companies. (WSJ) Canada plans to impose 25% tariffs on nearly $100 billion of imported U.S. goods. (WSJ) Shares of beleaguered European auto companies fell as tariffs went into effect . (WSJ) Mexico's and Canada's bets on free trade in North America are souring. (WSJ) Target warned that escalating tariffs would pressure its profit in the current quarter. (WSJ) A survey showed that a nascent expansion in U.S. manufacturing has slowed . (WSJ) Trump delayed the end of the de minimis duty exemption for products from Canada and Mexico. (Supply Chain Dive) CONTENT FROM: PENSKE LOGISTICS Gain the Big Picture. Gain Ground with Penske Logistics.

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Supply Chain Strategies

Advance Auto Parts is overhauling its supply chain in an effort to turn around years of shrinking market share.

The WSJ Logistics Report's Liz Young writes that the nation's fourth-largest auto-parts retailer is consolidating distribution centers, closing hundreds of stores and opening larger regional locations as it aims to better compete with rivals such as AutoZone and O'Reilly Automotive.

The strategy is meant to help the company get the products customers want into their hands more quickly. One of the challenges Advance has faced is that it has to both carry a wide variety of products and rapidly meet the needs of customers looking to fix a problem with their vehicle as quickly as possible.

Advance is making the changes at a time when many retailers are trying to better manage their inventories after the pandemic to have items where they need to be to respond to consumer demand. Number of the Day In Other News

OPEC+ said it would begin a long-delayed plan to ramp up production. (WSJ)

Volkswagen shares rose after the European Union relaxed emissions rules . (WSJ)

The CEO of Mediterranean Shipping said new fees on Chinese ships could hurt smaller U.S. ports . (Dow Jones Newswires)

A boom in global shipping is evaporating on U.S. tariffs and the reopening of the Red Sea shipping corridor. (Bloomberg)

Kuehne + Nagel shares fell as earnings at the freight forwarder's sea logistics business disappointed investors. (WSJ)

Former National Security Adviser John Bolton said the Trump administration's moves to withdraw the U.S. from long-standing alliances put global supply chains at risk . (Journal of Commerce)

Toro started a process to separate its tanker and liquefied petroleum gas businesses . (Splash 247)

Japanese container shipping line Ocean Network Express plans to spend $25 billion by 2030 to invest in growth. (Nikkei Asia)

CMA CGM plans to deploy an electric cargo barge with Nike in Vietnam. (Maritime Executive)

Newbuild ship orders have plunged so far this year. (TradeWinds)

China's UBTech Robotics deployed its first humanoid "team" in a car factory. (South China Morning Post)

Isuzu plans to establish a $280 million plant for commercial electric-vehicles in South Carolina. (Trucking Dive)

Shippers and less-than-truckload carriers are preparing for changes in the National Motor Freight Traffic Association rating system. (Logistics Management)

About Us

Mark R. Long is editor of WSJ Logistics Report. Reach him at [mark.long@wsj.com]. Follow the WSJ Logistics Report team on LinkedIn: Mark R. Long , Liz Young and Paul Berger .

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

March 04, 2025 07:03 ET (12:03 GMT)

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