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Valeo and Forvia, two prominent French automotive suppliers, have expressed concerns about the potential effects of the tariffs imposed by US President Donald Trump. These tariffs could have a significant impact on Europe’s struggling automotive supply chain.
Trump’s threat to impose 25% tariffs on EU goods, including the automotive sector, has sparked uncertainty within the industry. As the automotive supply chain awaits a decision on similar duties for goods from Canada and Mexico, companies like Valeo and Forvia fear the financial strain these tariffs could bring.
Christophe Périllat, CEO of Valeo, highlighted the lack of margins in the car industry, indicating that absorbing the tariffs would be challenging. Similarly, Patrick Koller, CEO of Forvia, emphasized the potential tariff risks for their operations in Mexico.
The looming tariffs pose a threat to an industry already grappling with declining demand for traditional cars and the costly shift towards electric vehicles. Both Valeo and Forvia have reported a decline in profits, leading to a drop in their stock prices.
German automotive suppliers Continental and Schaeffler have also felt the impact, with shares falling as concerns over the tariffs grow. The executives of these companies stress the limitations in adapting to such sudden changes in trade policies.
Despite the challenges, the companies are exploring options to mitigate the impact of the tariffs on their businesses. The uncertainty surrounding the negotiations with carmakers adds to the complexity of the situation.
The European automotive supply chain has already witnessed a rise in job cuts as companies struggle to navigate the changing landscape. With margins shrinking and costs escalating, the industry is facing a period of uncertainty and transformation.