Local car dealers are blaring big “pre-tariff” deals on new inventory that made it to the states prior to President Trump’s tariff announcement, but at least one major parts supplier has announced it is filing bankruptcy due to the tariffs.
After making the dramatic announcement, Trump walked back the 25% tariff on new and used car parts. However, Japanese owned company Marelli cited “uncertainty” in the market due to the impending tariffs as part of its reason to declare bankruptcy.
Marelli supplies components for Nissan and Stellantis, makers of Chrysler, Dodge and Jeep.
While some industry watchers have compared Marelli to be the “canary in the coal mine,” a report issued on June 11 as part of the bankruptcy filing shows that the company has faced financial problems for years prior to Trump taking office in his second term.
Out of all of the companies that Marelli makes parts for, only Jeep has been a consistent seller since before the pandemic. In fact, Chrysler only produces a minivan that is sold in the U.S., meanwhile, Nissan has been in a bit of a free fall for years.
With fewer Stellantis and Nissan products on the road, fewer spare parts are needed.
According to the Brookings Institute, the tariff threat is causing the prices of steel and other components used to assemble vehicles to rise, which, of course, affect the sticker price.
Early on in the tariff battle, Trump eased the situation by declaring that products that are compliant with the United States-Mexico-Canada Agreement (USMCA) are exempt.
This has, according to Brookings, created an important loophole that will allow China, which has little to no presence in the American auto market, and other countries to avoid the tariffs altogether.
There is also the very likely possibility that more tariffs will be imposed. Currently, the Commerce Department is reviewing the possibility of tariffs on copper, semiconductors and trucks, all of which could cause more financial headaches for overseas manufacturers.
If domestic automakers thought that the tariffs would give them a shot in the arm, the situation was never that rosy. Not long after announcing the tariffs, the Trump administration reached a deal with the UK that makes that country’s products virtually immune to the tariffs while American companies still face tariffs on parts they import.
Other overseas companies, such as Volkwagen are enacting “price protections” where the company will simply absorb the possible future tariffs to keep loyal customers coming back to their dealerships.
Even with the help of tariffs, American automakers continue to be their own worst enemy.
Truck maker Ram recently announced they are switching course and bringing back the 5.7 liter Hemi V-8 after Stellantis had eliminated the popular engine in favor of smaller V-6 engines.
“We own it. We got it wrong. And we’re fixing it,” Tim Kuniskis, the CEO of the Ram brand, said in an advertisement featuring the growling V-8 at a racetrack.
So, despite higher prices overall, it doesn’t appear that the tariffs are doing anything other than give new car dealerships a new marketing gimmick.
Scott Hudson is the Senior Investigative Reporter, Editorial Page Editor and weekly columnist for The Augusta Press. Reach him at scott@theaugustapress.com
