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Sept. 24, 2025 | Automakers “spread the peanut butter” with tariff costs, say experts

Sept. 24, 2025 | Automakers “spread the peanut butter” with tariff costs, say experts

Automotive News Daily Drive Sep 24, 2025 22 min
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About this episode

Automakers are pushing the EPA to relax tailpipe emissions regulations as they face challenges from tariffs and trade uncertainties. Experts discuss how these tariffs have left the industry in a state of paralysis, affecting decision-making and pricing strategies. The panel highlights the complexity of the automotive supply chain and the need for clarity in trade policies. Notable guests include industry leaders from Auto's Drive America and S&P Global Mobility, who share insights on managing costs and navigating the evolving landscape of tariffs and regulations.

Topics: emissions regulations tariffs and trade supply chain complexity cost management strategies automaker advocacy EV market impact global operations consumer pricing challenges
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Welcome to Daily Drive for Wednesday, September 24, 2025. I'm Kellan Walker in Las Vegas.
Today on the show, automakers urge the EPA to ease tailpipe emissions rules.
JLR works to pay struggling suppliers during its production haul, and GM extends a building
closure at its tech center after Legionella is confirmed. Plus, experts discuss the state of
tariffs and trade and what comes next for automakers, suppliers and retailers.
Figuring out what the actual cost is has been an issue, not wanting to confuse consumers about it,
not wanting to be the first one to say, I'm going to raise my prices by $2,000 because of the tariff
because, you know, there's somebody next door who's not going to.
Let's run through all the news you need to know to keep up in the auto industry.
A group representing just about every major automaker is asking the Trump administration
to roll back aggressive vehicle emissions limits. The Alliance for Automotive Innovation said in a
filing with the EPA that legislation signed by President Donald Trump in June will increase the
effective price of EVs and could lead to a near-term decline in EV market share.
They argue rules finalized last year under President Joe Biden are no longer feasible.
JLR is trying to clear a backlog of payments owed to suppliers. It's trying to ease a crisis
caused by a cyber attack that's brought the car makers factories to a standstill.
That's according to people familiar with the matter who spoke with Bloomberg.
The British automakers systems were brought down by the hack, leaving it struggling to
pay suppliers. Many of those parts makers are small manufacturers who rely on JLR's business.
One of the people said that in recent days JLR has paid about $400 million to partners
and aims to clear the backlog by the end of the month.
And General Motors is extending the closure of an engineering building at its Global Tech Center.
That's after tests confirmed that Legionella bacteria was present.
The automaker closed its coal engineering center on the campus in Warren, Michigan on September 10th
after two employees tested positive for Legionnaires disease. It's a serious form of pneumonia
that could spread through water and in heating and cooling systems.
The building had been expected to reopen as soon as this Monday, but GM said in a statement
that the building will remain closed this week. And those are today's headlines.
You can find more details on all those stories at AutoNews.com.
Here to talk more about automakers urging the EPA to ease tailpipe emissions rules is automotive news
tech and innovation reporter, Molly Boygon, who has been following the EPA's moves under the
new Trump administration. Molly, welcome back to Daily Drive. Thanks for having me.
So, Molly, back in July, the EPA proposed rescinding its finding that greenhouse gas
emissions are dangerous for human health. So, isn't the agency already moving in the direction
that automakers want? Yes, this is a very interesting letter from the Alliance to the
Trump administration. They're basically saying, okay, the EPA is planning on rescinding the
governing the automakers. And instead, the Alliance is saying, okay, well, this plan would
involve the rescission entirely of greenhouse gas emissions. And actually, what they're asking for
is a revision, which they say would provide certainty for the industry. So, the issue
was really pulling the greenhouse gas emissions altogether or revising them to a level that
provides some certainty for the industry. Well, how much does this push from automakers have to
do with the loss of federal support for EVs? The loss of federal support for EVs is an important
part of this. It's an elimination of an incentive that a lot of drivers identified as an important
factor in their purchasing of the EVs. I think that this is a sort of saying without saying
that the Alliance views that the administration is about to take a step that will go too far.
Basically, they're saying the standards established under the Biden administration are not feasible,
but it's also important for us to have some guardrails because a new administration could
take office in the coming years. And it'll basically just create some sort of connective
tissue for us to hold on to throughout administration. So, it's a really interesting
letter. I would highly recommend people check it out. It's on the Alliance's website. It's a
little dense, but they are kind of trying to thread this needle of saying, yeah, we don't
like the current standards, but don't leave us with nothing. Good stuff. Molly, thank you so much
for joining me. Thanks for having me. Coming up, experts weigh in on how tariffs are affecting the
auto industry and how companies can navigate the uncertainty. That's next on Daily Drive.
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Welcome back to Daily Drive. I'm Kellan Walker. The lack of clarity around long-term U.S. trade
policy, especially on tariffs, has left auto companies in a holding pattern. But experts say
automakers are also managing costs through spreading the peanut butter, distributing the
financial burden across global operations. This month at Automotive News Congress,
director of tech and innovation coverage, Hannah Lutz, hosted a panel about how the
trade environment is affecting the industry. Jennifer Safavian is president and CEO of
Auto's Drive America. Colin Shaw is president of MIMA Original Equipment Suppliers. Stephanie
Brinley is associate director of auto intelligence at S&P Global Mobility. And Patrick Kattencamp
is CEO of A2 Mac 1. Here's a piece of their conversation. Since tariffs began, many in the
industry have said they felt kind of frozen. They're kind of paralyzed. They can't make
really big decisions. They're waiting for clarity on long-term trade policy.
Are we any closer to that clarity today? And why does that clarity matter so much?
Jennifer, let's start with you. Sure. Thank you so much for having me. So that's
what a question to start with. So I would say, are we getting closer to certainty in some areas,
maybe a little bit? I would say things are getting a little bit more certain when it comes to the
EU, for instance, Japan, the deals that we've had with those two countries. But not necessarily yet
so much with South Korea, with Mexico, with Canada. Not to mention there are so many additional
tariffs that the administration is possibly looking to implement. There are other investigations
ongoing in a lot of different sectoral areas. And the expectation is that we'll increase the
amount of tariffs that the industry will be faced with. And then of course, to top all of that off,
we have, of course, the Supreme Court just a couple days ago deciding to take up the case
about the IEPA and the reciprocal tariffs. And so that leaves another big question mark as to
kind of where are things at. So I would say that I think for the industry, there's no question that
there isn't a lot of certainty right now. And I think that's what's what's missing. And that's
what's really needed. Yeah, I'm glad you brought up that court decision, because it can be confusing.
So how does that affect the auto industry? It was the country level tariffs that they were
discussing in the fentanyl. The country level tariffs are, of course, on all goods and services.
So for the auto industry, the sectoral tariffs are the most direct impact. And to Jennifer's
point, there are still several outstanding. Medium heavy commercial vehicles is one that's
still outstanding. The semiconductor isn't directly to automotive, it will have a significant
impact when and if that happens. And of course, the application of all the metals tariffs. So
the sectorals have the most direct impact. But the IEPA impact as well is all other parts. So
it's everything that's not defined as an auto's part. And I think some of us have tried to look
at the HTSUS tariff codes, and it's a little daunting. But we really have to get into there
to figure out what part is actually affected. Us covering the industry, us as consumers,
an auto part isn't necessarily an auto part. It's how it's defined in that code. So even those
reciprocal tariffs have an impact on the auto industry, but the most direct and most impactful
are the sectoral tariffs. Colin, how are you looking at this from the supplier point of view?
I mean, the suppliers you work with may have parts that are under the sectoral tariff and
others that are under the reciprocal. So what kind of clarity are they looking for,
and what are they facing right now? Yeah, so I was thinking about this, and
it reminded me of the month we all went into COVID. And I don't know if we all remember that. It was
like, Hey, am I going to be back to work next week? And then it was like, Okay, we're going to stay
at home and work. Okay, am I going to go back to work next week or the week after? And it wasn't
until about six months in that it dawned on to us that we may just be settling in for the long haul.
And we probably have maybe 12 to 18 months of we don't know what we're going to do. So
I think that may be some of what we're facing, whether it be the Supreme Court deciding on the
tariffs, whether it be some of these other decisions, what we're seeing is a lot of these
things are taking time to negotiate. What we're seeing with the country specific bills,
they're taking time. What is going to happen with USMC? That's going to take some time.
But we can look at some of the things that we are probably a little more sure on,
how we approach China. Over the last two and three administrations from Trump one to Biden
to Trump two, they've put increasingly more strict rules on China, still on aluminum.
Those have continued to ramp up from Trump one to Biden to Trump two. So there are areas where
we can get a little bit of certainty or comfort to make some decisions that, Hey,
maybe this is an area where I can bring here or I can invest in others. Other areas such as
how to approach what's happening with Canada, Mexico, still very much up in the air because
until we understand what's going to happen with USMCA, investments, how we work with those markets
is still going to be very unclear. So it's a little bit of a mixed message. And that's our
message to suppliers is you need to set up your decision in your strategic planning process to
include guideposts to say, if this decision happens, I think we can go ahead with this
decision. And it can't just be once a year, it's got to be monthly or quarterly, because every
supplier is a little bit different with the most complex supply chain in the entire world
from petrochemicals to upholstery to metal to semiconductors. And so every company is a little
bit different. And so it's how do you understand your landscape? How do you set up the milestones
for your specific business to make flexible decisions that you're comfortable with at that time?
And how are suppliers doing that? How are they actually able to make those decisions?
So a lot of it is they have really stepped up their efforts in advocacy. I'm really proud to
say a lot of the work that we do in Washington is really with our members. They're getting better
educated. They're putting the resources there. So they're understanding what it's going to take.
We've seen record engagement on how suppliers engage in the advocacy process with our elected
officials, because that's the first pipeline. So first thing is you got to be educated. And that's
what we've spent a lot of time that you're doing is educating, educating, educating, asking questions
so that they can make those decisions. Then it's about involving the rest of the organization,
because your sales teams are dealing with your customers, your supply chain is dealing with
with your suppliers, and all of them are affected a little bit differently. So it's then about making
sure the entire organization is involved. So you're seeing all of the different facets of your
business to make those decisions, because everybody's got a little bit of a piece they've
got to bring into the puzzle, and your business is going to be different from one supplier to the
next. So those are the general tenets of what we're trying to help suppliers with on the education,
and they're making sure all of the pieces of their business are involved, and we try to do that through
the various groups that we support in our supplier members. Yeah, that policy piece is really important.
I want to get back to that in a second. But Patrick, I wanted to ask you, going back to the
complexity of the tariffs and the complexity of the automotive supply chain,
how are you seeing all these regions represented in just one vehicle?
Yeah, I think with the visibility of the data we had, we just took a few cars which are American
manufactured, and then really into the details on materials, on battery packs, and so you end up that
30% of the total costs are still international, even for a very American car. And it's depending
on the supply chain strategy of the OEM, you have two regions, three or four regions involved into
the car. Okay, so yeah, that's very... It is international. Yeah, global auto industry for sure.
Stephanie, when you do a lot of forecasting, what assumptions are you building into those
rain out for production, sales, you talked about a bit earlier, and in the powertrain?
Yeah, that's been a hot topic for us all year, for sure. We keep adjusting as things happen,
of course, but at this point, we're looking at the expectation of an average global
auto's tariff at about 15%, what we're seeing out of Japan and the EU, and the possibility for
South Korea being in that same number as well. Some, of course, excluding China, which we'll
still agree completely with Callan, this is going to be its own field. USMCA and Mexico and Canada,
keeping it where it is seems quite sustainable, but I think we're at this point looking to expect
maybe see one agreement. Initially, there was the assumption that we might see these interim
stage agreements with Canada and Mexico and then get into the USMCA, but as the negotiations go
and as time drags on, we're starting to see the potential that it comes back to another agreement
next year. We do think that it'll end up being in that 12% to 15% range longer term, because we
have to look at that, and we have to say this is our line in the stand, and what is this going to
be in 2027? We're about in that space. We do also think that the reciprocal tariffs will stay around
15%. Initially, we thought they would stay closer to 10%. Obviously, we've got Brazil as at 50%,
and so there's some variability in that, but that's what we're really looking at in that space.
I think when we look at planning to, we're in a scenario situation, to Colin's point,
everybody is doing their research and they need to gate their decisions and they need to say,
okay, well, yeah, we've got this framework is under discussion right now. What if it works?
What if it doesn't work? At what point of a tariff do we need to make this decision, figure out
where that is, and start to look to see what happens in the meantime, trying to figure out
where to deal with your cost across the organization. There's the idea too of spreading
that across a global organization. One of my colleagues is Colin is spreading the peanut
butter, which I think works, right? This is more particular for global automakers like Toyota and
Hyundai and Honda that have much more regions across the world. Ford and GM at this point
are so dependent on North America, it's getting more difficult for them to do that,
but some of the others can have some other national sales arms take some of the cost,
have a different manufacturing group take some of the cost so you can kind of spread it around a
little bit so that the cost that comes back to the consumer doesn't necessarily reflect
this peer tariff cost. We're seeing that happen. We're seeing adjustments and those kinds of
scenarios. We do expect inflation to come up a little bit. We do think that in 2025,
we've got a more stable year than we thought. 2026, we're going to see a down year again,
but when you start looking at 27 and 28, and I think one of the early panels kind of hit on this,
we'll get to a new normal, whatever that new normal is, and we'll have our next challenge
because it's good that the industry is learning resiliency over the last 15 years because
we're going to have more challenges. That idea of spreading the peanut butter is a good way to put
it. It goes to a question we got the audience. Please keep asking your questions and I'll ask
them up here. Is the uncertainty around tariff rates and the pending litigation the reason we
haven't seen substantial pass through of tariff costs to prices? You mentioned it's kind of a
thin spread. Could we see that ramp up? We haven't seen pricing increase dramatically so far because
automakers are eating it at this point. That isn't sustainable in the position that it is right
now. It has to change. It has to evolve, but you don't want to have wild price swings for your
consumers. You want to figure out how you're going to deal with this. You don't know what the tariff
is actually going to be, so you don't know if the cost structure that you have today. You know it's
not going to be the same cost structure I'll rephrase that because you know the tariffs are
going to be higher. Whether they're 25% or 15% you know it's going to be higher. You know you're
also pulling all of these levers to adjust your costs. There isn't a straight line right now to
be able to say it's going to be $10 on every vehicle. There we go. We'll just add it by that.
Figuring out what the actual cost is has been an issue. Not wanting to confuse consumers about it.
Not wanting to be the first one to say I'm going to raise my prices by $2,000 because of the tariff
because you know there's somebody next door who's not going to because that's an advantage as well.
There's a lot of variability in slowing that down with 2026 model year and going forward. We will
see pricing increases, but they're not going to be as dramatic. We're going to see easy resourcing as
much as possible. We're going to see cost containment. We're definitely seeing trim level change,
decontenting, moving things around. We could see components especially if you throw in the fact that
you don't have regulatory feel efficiency as much. You could see some components change and get maybe
light weighting is for a minute slightly less important than it was. Maybe you can shift to
a slightly less expensive cost. There's a lot of ways to manage that out. That's one of the reasons
because it's so complicated. How do you explain it to a consumer? Good luck with that.
Stephanie Brinley is Associate Director of Auto Intelligence at S&P Global Mobility. Colin Shaw
is President of MIMA Original Equipment Suppliers. Patrick Canton Camp is CEO of A2 Mac1 and Jennifer
Sevevian is President and CEO of Autos Drive America. They spoke with our own Hannah Lutz
at Automotive News Congress in Detroit. That's Daily Drive for today. I'm Kellan Walker.
Thanks to Automotive News Executive Producer Jake Nier as well as our own Molly Boygon
and Lindsey Van Hully for their reporting for today's podcast. You can get the latest news on
trade and tariffs, emissions regulations and everything happening in the auto industry at
AutoNews.com. Come back tomorrow for a conversation with General Motors Senior Vice President of
Global Purchasing and Supply Chain Jeff Morrison. One of the common threads that we've seen this
just the need for us to really understand and map our supply chain better and figure out where we
need to engage deeper beyond the tier one level but really in some cases going all the way back
to mines and processing and critical minerals. We'd love to hear from you. Let us know what you
think of the show and the topics we covered today. So, it's an email at DailyDrive at AutoNews.com
or leave us a voicemail at 313-444-2774. And if you enjoy the podcast, remember to like,
leave a review and subscribe so you never miss an episode.

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