As the Trump administration’s tariff policy continues to evolve, automotive retail leaders are watching closely. In today’s episode of Inside M&A, co-hosts Brian Gordon, president of the Dave Cantin Group, and Jim Fitzpatrick are joined by Andrew Gier, research analyst at Capstone, to discuss how upcoming trade decisions, protectionist priorities, and reciprocal agreements could significantly impact the automotive supply chain and dealership market.
The U.S. government is pursuing aggressive trade negotiations centered around tariff reciprocity, with a pivotal July 9 deadline that could reshape the cost landscape for imported goods. For the auto industry, which heavily depends on foreign parts and materials, the consequences could be significant. Currently, tariffs are set at a temporary 10% across the board, but without finalized deals, some countries could face significant rate hikes.
Gier explains that this temporary tariff reprieve was designed to pressure trading partners into new agreements, but many nations may not reach a consensus in time. U.S. Trade Representative (USTR) officials are under strain, with a small staff of roughly 200 expected to coordinate with over 150 countries simultaneously. Typically, it takes six months for one country to assess its trade goals before entering an agreement. In this scenario, negotiations are expected to be completed in just a few weeks.
The administration has placed a unique emphasis on the auto industry, reflecting long-standing concerns about foreign competition in the sector. This includes using Section 232 trade authority, typically reserved for national security issues, applied directly to automotive imports. While the administration’s broader goal is economic resilience and the reshoring of critical supply chains, swing states and manufacturing jobs in the Midwest also appear to factor heavily into trade strategy.
Despite this focus, past policy contradictions have hurt the industry. For instance, earlier steel and aluminum tariffs increased input costs for automakers, despite claims of support. Gier cautions that assuming a one-way path toward lower tariffs is shortsighted. He believes more rate hikes are likely as the administration looks to apply pressure and, in some cases, make examples of non-cooperative trading partners. Europe’s role in the auto supply chain, particularly in the context of U.S.-EU trade talks, could be vulnerable if deal-making stalls.
In the weeks ahead, many agreements may be limited in scope, with language centered around “agreements in principle” or “a deal to continue talks” rather than fully developed trade terms. Some countries may get extensions, while others could face steep tariff increases that ripple through industries like automotive retail.
Gier underscores the volatility of the current trade and tariff environment and the difficulty of long-term planning for auto businesses. Dealers, manufacturers, and suppliers must prepare for a range of possible outcomes as tariff deadlines approach and global negotiations continue in flux.
“Autos are one of those rare industries that they actually get a little bit of priority. They occupy a special place within this administration's mind. You see that in the fact that they went through the effort to go through the specific Section 232 process on autos. You can go back to interviews he (President Trump) was doing in the 80s, where he was talking about ‘Why are there so many Japanese cars on American roads?’ He's always been interested in the trade deficit and the dependence on imports in the auto industry in particular.” – Andrew Gier
