Automobile suppliers must “confirm contract”
Donald Trump’s second term as President of the United States brings policies built around the central principles of “America First.” In the field of international trade, new and broad import duties have been proposed that directly affect US trade with many countries. In fact, they raise costs to the industry and consumers of goods and raw materials sourced from overseas, making domestic sourcing more attractive on the basis of price.
The danger is that the response to retaliatory import duties from other countries around the world meets the widespread new trade duties imposed on imports of goods. Economists say the major rounds of international trade tariffs on “Tit-for-Tat” will reduce the volume of overall international trade and have a negative impact on the global economy.
Industry such as automobiles have its long and complex, international supply chains – particularly the “friction” of potential additional management where parts or finished vehicles are generated across borders, particularly those exposed to such additional taxes. ” crosses the border and receives a new check.
Dykema is a US law firm with a practice group covering the automotive and transportation sectors. We spoke to Laura Baucus, Director and Supply Chain Attorney for Dykema’s Automotive Industry Group, and Mary Beth McGowan, Government Policy Advisor, Dykema, to learn more about the potential impacts of trade tariffs and risk mitigation measures.
JA: How serious are the consequences of the new import duties and where will the potential disruption be at its peak?
Laura Baucus (LB): Not only does tariffs increase costs, they have the ability to create contractual disruption. Some supply contracts do not specify who will absorb the hit, cause pricing disputes, and burden long-term relationships. Industries with deep intertwined international supply chains are particularly vulnerable. Changing tariffs – Leave businesses that can’t be planned every day. In the automotive industry where parts cross borders every day, this unpredictability can affect operations.
JA: How can companies, particularly automotive suppliers, allow the risks posed by additional trade tariffs?
lb: Proactive legal strategies are important. Companies need to review contracts to see whether they will address increased tariff-related costs, whether price adjustment mechanisms exist, and whether alternative sourcing is optional. Pricing clauses and Force the power The regulations deserve a meticulous appearance. Going forward, automobile and other manufacturing companies will develop flexibility in their procurement strategies (“natural hedges”) to improve contract terms and to keep production moving no matter how trade policies change. This allows you to manage tariff shaking.