Trump’s Tariffs: A Wake-up Call for Automotive Supply Chains and Treasury Teams

Published: April 14, 2025

The recent round/s of US President Donald Trump’s tariffs, row backs and countermeasures has thrown the world into turmoil. Christian Kellner, Senior Director, Supply Solutions, Dun & Bradstreet, takes a look at the impact from the perspective of one of the hardest hit industries.

The automotive industry is no stranger to disruption, with Covid-19, labour shortages and geopolitical tensions all having a significant impact in recent years. However, the introduction of Trump’s sweeping tariffs, including 25% tariffs on cars and car parts (at the time of writing) entering the US from overseas, has triggered a wave of uncertainty through an already fragile global supply chain. In the last fortnight alone, we’ve seen Jaguar Land Rover pause all shipments to the US as it works to address the new trading terms, with Audi following suit a day later.

As political and trade developments continue to unfold, the short- and long-term implications for original equipment manufacturers (OEMs), suppliers, and their finance teams are becoming increasingly clear. According to our own analysis of Unted States International Trade Commission (USITC) trade data, the total potential tariff charge on assembled vehicles and car parts is approximately $76bn. As such, the need for manufacturers to be agile, forward-looking, and make decisions based on sound, up-to-date data to manage risk has never been more urgent.

Short-term disruption

In the near term, tariffs directly translate into higher costs for exporting cars and components to the US. This is particularly problematic within North America, where parts frequently cross borders multiple times during the production process. Every crossing amplifies exposure to tariffs, squeezing margins or forcing manufacturers to increase prices, neither of which is desirable in an already competitive market.

Early signs of knock-on effects are already evident. Since the start of April, some shipments have been rerouted to avoid hotspots or tariff-affected routes, and we are likely to see companies seek alternative suppliers to minimise exposure. Additionally, treasury departments will begin to feel the squeeze on their working capital as unexpected charges and slower shipping timelines will disrupt cash flow forecasts.

Long-term strategic shifts

While immediate mitigation is vital, the industry must now re-evaluate its long-term strategy. Automotive manufacturers and suppliers will increasingly want to consider shifting elements of their supply chain, whether that be sourcing, production, or final assembly, to the US or closer to the US to reduce tariff exposure and enhance supply chain resilience. Otherwise, they risk losing competitiveness in the US market.

Effective scenario planning and supplier evaluation rely on access to clean, accurate data, without a clear and current view of supplier networks, organisations risk making decisions based on assumptions or incomplete information. This limits their ability to assess exposure, model alternative scenarios and plan with confidence. Detailed supplier analysis enables better supply chain planning and optimisation, improving the ability to respond proactively to challenges.

This strategic shift is not solely about avoiding tariffs. It reflects a growing recognition that dependency on any single country or region now constitutes a significant risk. Nowhere is this more evident than in the semiconductor sector, where Taiwan remains a linchpin. Diversifying supply chains, especially beyond Tier 1 suppliers, to reduce geopolitical exposure is easier said than done, but it is becoming essential for companies aiming to build long-term operational resilience.

Nearshoring and onshoring offer compelling opportunities but come with substantial capital requirements. Establishing new manufacturing facilities or entering into local partnerships demands upfront investment and long-term financial planning.

By assessing the financial stability, compliance, and reliability of immediate and Tier N suppliers (those beyond the immediate suppliers) in this context, risk is minimised. If there is potential for disruption, this can be detected at an early stage and alternative vendors or strategies can be identified before there is any significant impact.

From scorekeeper to strategic adviser

Within this shifting landscape, the treasury function is being redefined. No longer confined to liquidity management and financial reporting, treasury teams are playing an increasingly strategic role. Their remit now includes evaluating cost structures, identifying funding options, and ensuring financial agility in the face of uncertainty.

For treasurers these tariffs aren’t just a cost-management issue, but a real-time test of cash flow resiliency, working capital agility, and forecasting sophistication. For treasury leaders navigating the current environment, there are several key strategies to consider:

1. Adjust pricing and margin strategies: Determine where cost absorption ends and price increases to customers begin. Treasury must collaborate closely with commercial teams to maintain a competitive yet financially sustainable position.
2. Scenario modelling and market focus: Conduct scenario analysis to assess whether to reduce export volumes or strengthen presence in the US market.
3. Assessing ROI on nearshoring: Undertake rigorous financial evaluations of relocating component manufacturing to the US or nearby territories. Key considerations include labour costs, infrastructure, incentives, and logistics.
4. Capital investment planning: Treasury teams must prepare for heightened financing requirements to support facility development, local sourcing initiatives, or technology investment.
5. Supply chain cost modelling: Compare long-term costs of domestic production versus continued reliance on an import-led supply chain that remains vulnerable to tariffs and disruptions.
6. Review and renegotiate contracts: Reassess global supplier agreements with an eye towards pricing flexibility and revised terms in light of emerging risks.
7. Partnering with R&D: Work alongside engineering teams to support product redesigns that reduce part complexity or dependence on high-risk imported materials.

The road ahead

While there are significant hurdles on the horizon for the automotive industry, with every challenge comes opportunity. As tariffs redraw the map of global trade, OEMS and suppliers that can combine strategic foresight, deeper scenario planning, and financial agility with robust data-driven decision making will be best positioned to adapt and thrive.

Treasury teams are no longer a function of the back office, but instead have a crucial role to play in navigating disruption, unlocking value, and steering the business toward a more resilient, future-ready supply chain.

¹ _{According to Dun & Bradstreet’s analysis of USITC trade data, in 2024 the US imported $217bn in assembled vehicles, and $87bn in car parts, totalling $304bn in imports potentially being tariffed. This means, the total potential tariff charge on this group of products is approximately $76bn.}