A proclamation signed by President Donald Trump to raise tariffs on steel and aluminum imports to 25% could potentially change the cost of vehicle parts and, ultimately, what consumers pay for vehicles and repairs, said Abey K. Abraham, Ducker Carlisle principal, on Thursday. 

Trump removed exemptions under Section 232 of the Trade Expansion Act with the proclamation. This includes applying strict “melted and poured” standards and expanding the tariffs to include key downstream products. 

“President Trump is taking action to protect America’s critical steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity,” a White House press release says. 

Abraham said his firm has been doing studies for the Aluminum Association for more than two decades and is actively monitoring what the tariffs mean for the auto industry. 

“They are a giant ship and they are not nimble,” Abraham said. “It takes a lot of planning to bring a vehicle out, usually three years before production starts.” 

Automakers are currently designing vehicles that will be released in 2028, he said. 

Abraham said he is helping clients with supply chain and logistics sources find suppliers who may have more of a domestic footprint. He said this includes assisting companies by looking at site plans and assessments for moving manufacturing to the U.S.  

He said the tariffs are meant to ensure that Aluminum and Steel are not just transformed in the United States but poured and melted. 

A vast majority of aluminum used in the United States is poured and melted in Canada, Abraham said. He said Canada invested in power sources, such as hydrogen, that make its aluminum production more competitive on the global scale. 

“A lot of the capacity we used to have in the United States strategically got shifted to Canada,” Abraham said. 

The aluminum is shipped to the U.S. and transformed into an aluminum sheet which is used in the automotive industry for parts such as fenders, doors, and battery boxes. 

Currently, the U.S. doesn’t have the capacity to supply the industry’s needs for aluminum that is poured and cast domestically. 

“It will take a long time and a lot of investment if we want to bring that up to speed,” Abraham said. 

The automotive industry will have to import the material at the higher tariffs until then, he said. 

Abraham said the auto industry isn’t able to quickly shift away from using aluminum because vehicles are often produced five to eight years after it is designed and engineered. 

The U.S. auto industry relies on imported steel less than it does aluminum, Abraham said. However, he said about a quarter of steel is still imported before it is transformed into a finished part. 

Automakers use specific alloys for parts, and it could be difficult for the U.S. industry to meet those demands immediately, he said. 

“It is going to take us years to build that capacity,” Abraham said. 

Parts manufacturing in the U.S. also has different components such as labor rates and union protections, he said. 

“There is going to be an increase in price,” Abraham said. “Whoever is importing it in is going to pay for that but they are not going to absorb the cost. At the end of the day, the consumer is going to bridge that gap.” 

Abraham said parts for the repair industry also could see an increase from the tariffs. He said that cost could be passed from the repair shops to the consumers and, eventually, the auto insurance companies, which could raise their premiums. 

General Motors CEO Mary Barry told reporters that it is “evaluating” the impact of the steel and aluminum tariffs on its business but that the company sources a “significant” amount of both from the U.S., according to CNBC. 

Bill Hanvey, president and CEO of the Auto Care Association, said in a press release Wednesday that the expansion of the tariffs will have far-reaching consequences beyond the steel and aluminum industries. 

“Vehicle parts, along with countless other downstream industries, depend on a stable supply of raw material to create and provide the countless vehicle parts that keep our families, businesses, and economy running,” Hanvey says in the release. “These industries are a critical part of not only the American transportation industry but also U.S. manufacturing as a whole. Many specialty steel products used in our industry are not readily available from domestic sources, making access to global supply chains essential. U.S. manufacturers are at a competitive disadvantage, making it more difficult to compete in both domestic and international markets.”

The release says that the Auto Care Association remains supportive of the Trump administration’s broader goals of achieving fair and balanced international trade relationships, expanding job creation and opportunities in the U.S., and lowering the cost of living. 

“While we believe that addressing trade imbalances is essential to maintaining a healthy and thriving economy, we urge President Trump to consider the potential unintended and immediate consequences of these tariffs on everyday Americans and to explore solutions that protect both American businesses and consumers while advancing the goal of strengthening the American economy and workforce,” the release says. 

In a letter posted on the Automotive Body Parts Association (ABPA) website Feb. 9, ABPA Executive Director Edward Salamy called the tariffs far-reaching. 

“They are expected to increase the cost of imported steel and aluminum, which could lead to higher production costs for manufacturers and potentially result in increased prices for consumers,” Salami said ahead of the president signing the proclamation. “This price impact would not only affect aftermarket collision repair parts but also OEM parts, both of which rely heavily on these materials sourced from outside of the US. As a result, vehicle repair costs are likely to rise, contributing to an increase in total losses declared by insurers—ultimately burdening consumers with higher premiums and replacement costs.”

Abraham and  Ducker’s Director and Global Automotive Practice Leader, Bertrand Rakoto, took the stage at the 2023 OEM Collision Repair Technology Summit at the SEMA Show, joined by Rivian and Lucid Motors. The panel to discuss the structural makeup of their vehicles, and a forecast of aluminum and composite material use in battery electric vehicles (BEVs) can be accessed online at https://rde.scrs.com/p/2023-oem2.

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