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Tariff Trials: Automotive Supplier Says It Won't Bear the Increased Costs Brought By Trade Wars
Automakers and their suppliers are in business to do one thing: Make money for themselves and shareholders. Because of that, it should come as no surprise that one major player in the industry has vowed not to eat the costs of Trump’s proposed tariffs. Adient plc recently said it is not able to float the costs on an ongoing basis.
Automakers and their suppliers are in business to do one thing: Make money for themselves and shareholders. Because of that, it should come as no surprise that one major player in the industry has vowed not to eat the costs of Trump’s proposed tariffs. Adient plc recently said it is not able to float the costs on an ongoing basis.
Adient President and CEO Jerome Dorlack told investors this week that, “We’ve made it clear to them (automakers and customers) that this is not – at a 25 percent or even at a 10 percent level – a burden that Adient is prepared to take on to our P&L on an ongoing basis and there will be a need for recovery that has to then be passed through the value chain.”
In summary, auto seat supplier Adient won’t cut into its profit margins to compensate for the added costs tariffs bring and will pass them onto its customers, which in this case are the automakers. In turn, they are likely to adjust retail pricing to account for the increased costs, driving up vehicle prices on dealers’ lots.
Adient is one of the earliest public companies to come up with a statement on how tariffs could move the financial needle, and it could be the canary in the coal mine for other suppliers eying similar measures. The threat of tariffs has driven businesses across several industries into overdrive as they attempt to navigate uncertain policies and maintain their bottom lines.
[Images: BMW, Volkswagen]
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