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Tariffs create cash flow strain for auto suppliers
Cash flow challenges
The automotive industry remains heavily impacted by U.S. tariffs and the related cash flow challenges. The sector continues to see consolidation, with recent mergers reshaping the competitive landscape. At least one large parts maker player has filed for bankruptcy.
By this point in this year’s evolution of tariffs, many automotive suppliers have captured the cost reductions they could through internal operational efficiencies. Now, they’re looking for other opportunities for cautious fiscal management and risk reduction, including:
- Shifting more production to lines in the United States to limit their tariff exposure and that of the automakers they supply
- Enhancing their ability to identify the composition and country of origin of the parts, components, and materials they must still import in order to minimize unplanned liabilities
- Conducting mini-bids to re-evaluate inefficiencies in their freight transportation networks
Automotive companies are advised to maintain scorecards on their carriers, revisit their route guides, and rationalize the number of carriers they work with—focusing on the best performers. When it comes to RFPs, consider bundling truckload, less than truckload, cross border, and intermodal freight to get a more strategic plan rather than putting those out to bid separately.
Lower tariffs on Chinese imports extended
The 90-day extension of lower U.S. tariffs on Chinese goods through November 10, 2025, means that the reciprocal tariff remains at 10% and the fentanyl-related tariff remains at 20% for now. Those are on top of automotive-specific tariffs and tariffs on steel, aluminum, and copper content. The extension offers breathing room for U.S. importers to reassess their geographic sourcing strategies.
The C.H. Robinson Sourcing Analysis Tool helps customers understand the tariff and supply-chain impacts of buying their goods and materials from alternative locations.
Reduction in EU automotive tariffs takes a step forward
European manufacturers importing vehicles and parts to the United States are slated to have their tariffs reduced to 15%, under a framework released in August. This update came three weeks after the trade agreement was reached in July.
The deal stipulated that the reduction would be effective the first day of the month in which the EU starts the legislative process to eliminate its tariffs on all U.S. industrial goods and provide preferential market access for a wide range of U.S. seafood and agricultural products. With the European Commission taking that step August 28, the tariff is expected to be retroactive to August 1, 2025.
Although a sizeable relief from the 27.5% rate before the deal, a 15% tariff remains a significant burden. The German Association of the Automotive Industry (VDA) estimates it will cost that country’s automotive companies billions annually. This may lead EU auto part-makers to reassess their U.S. market strategies or shift more production to North America to avoid tariffs. C.H. Robinson has automotive centers of excellence in Europe, North America, Latin America, India, China and Australia to assist with scenario modeling.
Reduced tariffs on auto parts from Japan and South Korea in limbo
Automotive companies are waiting on the lower auto tariffs promised in the U.S. trade deals with Japan and South Korea to go into effect.
Under the deal reached with Japan in July, the U.S. agreed to cut tariffs on Japanese car imports to 15% from levies totaling 27.5%, but did not announce a timeframe for the change to take effect. Whether the tariffs would be stacked on Section 232 tariffs such as those on steel or aluminum is also at issue. A similar deal reached with South Korea has not been finalized either, with not even a fact sheet or framework released.
Japan is the No. 4 supplier of auto parts to the United States and South Korea No. 5. Talks with both countries continue.
U.S. appeals court rules on legality of tariffs
On August 29, 2025, a federal appeals court ruled that the U.S. administration didn’t have the authority to impose tariffs by declaring a national emergency, upholding a lower court’s decision. The reciprocal tariffs in place on imports from most countries were established under the International Emergency Economic Powers Act (IEEPA), as were tariffs imposed on goods from China, Mexico, and Canada with the goal of reducing the flow of fentanyl.
For now, the ruling does not affect importers because enforcement is delayed until October 14, 2025, and an appeal to the U.S. Supreme Court is expected. If the Supreme Court rules similarly to the appeals court, it’s uncertain what the reimbursement process might be.
In the meantime, these reciprocal tariff rates remain in place:
- For imports from countries with specific reciprocal tariff rates established: 15-41%
- The baseline tariff for goods from other countries: 10%
- On Chinese imports: 10% rate now extended until November 10, 2025
These fentanyl-related tariffs remain in place:
- On Chinese imports: 20% rate
- On Canadian imports: Increased to 35% as of August 1, 2025, except for goods that are USMCA certified
- On Mexico imports: As of July 31, it was announced that the 25% rate would stay in place for at least 90 days. USMCA-certified goods remain duty free.