Major automakers like GM and Ford fear bankruptcies and layoffs due to Donald Trump's 25 percent tariff. In a new letter, they warn of a domino effect.
The US auto industry is issuing a strong warning to Donald Trump over his 25 percent tariff on auto parts and imported cars. Major players such as General Motors and Ford are among the most concerned.
But even smaller car brands like Volvo think it all sounds dangerous.
The warning comes in the form of a joint letter sent to key ministers in the US government.
The Detroit Free Press writes that.
The letter is signed by major lobby organizations, representing both car manufacturers and important subcontractors.
The car dealer organizations also support the request. They share the concern about the consequences of the tariff.
The letter particularly highlights the vulnerability of subcontractors. Many do not have the necessary finances to withstand sudden stops caused by customs.
Consequences of Trump's tariffs
"Most auto suppliers are not capitalized for a sudden tariff-induced disruption," the letter states.
– Many are already in need and will face production stops, layoffs and bankruptcy.
The industry fears a serious domino effect. It could hit the entire American auto sector hard.
Such an effect could mean higher car prices for consumers. At the same time, sales at car dealers risk falling noticeably.
Car servicing and repairs may also become more expensive for car owners, making it harder to predict the future costs of car ownership.
The effect of the tariffs could be the exact opposite of what Donald Trump originally wanted. His goal was to strengthen American industry and create jobs.
Reactions from car manufacturers like Volvo
Donald Trump has not yet promised a formal easing of the tariffs. However, he has indicated a willingness to help individual car companies specifically.
Several automakers have already responded to the tariffs. Some have stopped importing certain cars or parts into the United States.
Volvo Cars has mentioned considering moving production. They are looking at the possibility of moving production from Europe to the United States.
However, such a move is a complex process and can take several years to implement in practice.
Volvo Trucks is already feeling the direct impact of the tariffs. The company recently had to lay off 800 employees at factories in the US due to the tariffs.
The letter of warning was sent to US Treasury Secretary Scott Bessent. Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer also received the letter.
The automotive market is constantly influenced by political and economic decisions, such as tariffs in the US. But we don't need to look all the way across the Atlantic to find political decisions that have influenced – and continue to influence – the automotive industry. Read more about it here .
