Exploring Tariff Impact on Automobile Supply Chains
Tariffs, Tariffs, Tariffs.
This is a familiar tune humming across global automotive and EV industries, resulting in a shifting of gears and a reshaping of trade dynamics and manufacturing strategies.
The North American supply chain for these markets is experiencing significant changes, with major automakers preparing for potential financial challenges and the possibility of increased vehicle costs.
According to a March 2025 Frost and Sullivan briefing titled “President Trump’s Policies and Their Impact on the Automotive Industry,” these tariffs have triggered an urgent recalibration of sourcing strategies, creating a heightened urgency around localised production.
Modern vehicles rely on supply chains that are globally distributed. As illustrated in the Frost and Sullivan briefing, a single component, such as a capacitor or a transmission module, may cross the border five to seven times before final assembly. Additionally, this journey can span suppliers in Asia, involve subassembly in Mexico, quality processing in the US, and final integration in Canada. Even with domestically assembled cars, critical parts like axles, electronics, and engines are often sourced from Canada and Mexico. Regarding EVs, according to IDTecEx Research, out of the 1.3 million EVs sold in the US in 2024, “66% were assembled in the US, 12% were assembled in Mexico or Canada, and 22% were assembled elsewhere.”
With the interconnection of the North American supply chain, we can see that parts for a traditional ICE vehicle, a HEV or an EV vehicle, all can cross the border multiple times before final assembly.
So, the major challenge: if tariffs are applied at multiple stages, the total cost of car production can increase due to the pass-through costs of imported components.
As domestic priorities for the US evolve, tariffs will undoubtedly continue to shift throughout Q2 of 2025, if not throughout the rest of the year. And, tariffs will not hit everyone and every industry similarly. Factors like product category, geographic location, and how long the tariffs stay in effect, all have a significant impact.
USMCA refers to the United States-Mexico-Canada Agreement. “USMCA-compliant products” provide significant relief to car manufacturers by reducing costs and offering more predictable access to the North American supply chain. With USMCA-compliant products, manufacturers can more easily establish integrated supply chains across borders without the financial burden of import taxes, which is particularly valuable during this period of global tariff volatility.
For the car industry, for a vehicle to be USMCA-compliant, the vehicle must have a certain percentage (currently 75%) of its components made in North America. Additionally, car manufacturers must meet further requirements, such as using high-wage labour and sourcing key materials like steel and aluminium regionally. In line with the percentage of vehicle content originating in the US, companies can reduce their payable tariffs, providing a significant advantage to businesses with a North American presence.
*Note: USMCA car compliance policies may have changed since the time this article was written.
Now that these auto tariffs are here, how are automakers responding? The answer is complex. Strategies of all major car manufacturers differ. From ceasing imports to moving production to US plants, to implementing price increases and price freezes, to reassessing supply chains to source more parts domestically, to simply pausing to see what happens next, no car manufacturer has the same approach.
This excellent Newsweek article titled, “Automakers Change Production, Sales Plans Based on Trump Tariffs,” effectively explores what’s next for some of the most well-known car makers in the world.
Generally, domestic producers can avoid the majority of “extra costs,” creating a competitive imbalance, with some businesses feeling the pressure of tariffs more than others. However, for core export-driven industries like automotive, tariffs could be a double-edged sword as import levies dampen downstream demand and, undoubtedly, disrupt global trade flows.
Saint-Gobain Tape Solutions has a global presence, positioning us as a key resource that automotive manufacturers can utilise as they seek to source high-performance components domestically. As trade policies continue to evolve, components such as bonding, sealing, and thermal management solutions are becoming strategic priorities for manufacturers of EVs, HEVs, and traditional ICE vehicles.
How does our portfolio of product offerings and solutions help?
Our USMCA-compliant automotive products, such as our Norbond® Polyurethane Tapes or Norseal® Gasketing Solutions, can be crucial in helping to offset tariff costs.
In traditional automotive systems, foam and tape solutions play a vital role in improving vehicle comfort, durability, and assembly efficiency. For climate control applications, our low fogging and low VOC gasketing materials can enhance in-cabin air quality and provide long-lasting performance in HVAC and cowl grill systems. In door and window systems, we offer lightweight, soft sealing materials designed for consistent compression, water sealing, and low friction. And, for body and exterior applications, our Norbond Tapes are specially engineered to bond a variety of substrates, including the challenging surfaces of new clearcoat paint systems. These durable, paint-safe bonding solutions are trusted for mounting emblems, body side mouldings, step trims, and wheel weights, offering strong adhesion, excellent shear strength, and OEM approval across multiple platforms.
In the fast-growing, ever-evolving electric vehicle segment, our solutions portfolio can help support key thermal and structural requirements with a range of US-manufactured solutions. Silicone foam gaskets and polyurethane (PUR) holding pads are designed for safety and ease of assembly in high-voltage systems such as battery packs, battery management housings, and power electronics. Additionally, we produce both mica tapes and mica-free alternatives, available locally in the US. These products have superior electrical insulating properties and can serve as excellent insulators for battery compartments as well as their charging components. They maintain outstanding flame resistance, helping to mitigate the severity of battery thermal runaway in EV battery packs.
By choosing Saint-Gobain Tape Solutions, OEMs and TIER one suppliers can gain access to a responsive, regional partner, committed to long-term success and collaboration.
We invite you to connect with our team to learn more about our global availability of products, local manufacturing capabilities and how we can work together to not only reduce the impact of tariffs, but deliver high-performance solutions that meet the challenging demands of today’s automotive and EV industries.
Are tariffs still on your mind? Learn how the Tape Solutions team is equipped to help reduce the impact of tariffs and deliver high-performance solutions that meet the challenging demands of today’s automotive and EV industries.