The Zhitong Finance App learned that according to the latest information revealed by automotive industry executives attending the Las Vegas International Consumer Electronics Show (CES), global automakers and auto parts suppliers are studying how much production scale they can move to the US or closer to the US to deal with further tariff increases promised by US President-elect Donald Trump (Donald Trump). If these manufacturers and parts suppliers, which occupy an important position in the global automobile market, collectively transfer production capacity to the US, it means that the “return of manufacturing to America” led by Trump is no longer an empty populist slogan, but the actual process is fully accelerated.

The automobile industry can be described as having gone through an eight-year period of “American protectionism.” From actual and threatening tariffs during Trump's first term to continuing Trump's tariff measures and the “US Inflation Rate Reduction Act” during Joe Biden's presidency, the so-called “America First” has become the central starting point for various US policies. Most of these measures directly target China and the Asian region, particularly the Biden administration's important proposal to ban the use of Chinese software and hardware in cars on US roads.

However, Trump, who is about to officially take office, vowed to take further aggressive measures to fully return the manufacturing industry to the US and “make America great again” (the so-called “MAGA”). Trump's plan is to levy a 10% package tariff on all imported goods from the US and a tariff of up to 60% on Chinese goods after taking office on January 20. In late November, he even specifically promised that after taking office on January 20, he would levy tariffs of up to 25% on imported goods from Canada and Mexico.

Auto giants followed TSMC's footsteps to build factories in the US

Such high tariffs will be difficult to pass on to all consumers, and will make core auto parts produced in the low-cost market uneconomical, or it is almost impossible for some export-focused Chinese companies to sell any products in the US market due to the situation facing China alone. As a result, some core manufacturers in the global automotive supply chain are considering moving production to the US, or closer to the US. Bosch and Continental Group are even exploring localized production in the US to avoid tariffs.

Under the heavy pressure of tariffs, the “return of manufacturing to the US” led by Trump seems to have begun an acceleration process. Not only are semiconductor manufacturing giants from the Asian region such as TSMC, Samsung Electronics, and SK Hynix striving to take root in the US to achieve “pure American-made” cutting-edge chip products, but automobile manufacturers and auto parts suppliers from around the world are also planning localized production in the US.

According to reports, after many years of construction, the first fab built by TSMC in Arizona, USA, began using the N4P process in September of last year to manufacture Apple A16 Bionic smartphone chips in small batches. Recently, it was revealed that Apple had begun to manufacture chips for Apple Watch series products.

“Anyone can calculate this number,” Paul Thomas, president of North America at Bosch, the world's largest auto parts supplier, said in an interview. “If the tariffs are 10%, 20%, 60%... you have to reconsider: OK, how many situations are reasonable, and what actions should we take to deal with them?” “Before he (Trump) took office, we had already begun working on several of these important projects.”

On the sidelines of the CES technology conference, Thomas gave a theoretical example, that Bosch may currently manufacture general-grade electronic control units in Malaysia or similar markets, but now “we are considering manufacturing in Mexico or Brazil... these are regions we are already involved in,” he said.

Thomas added that Bosch may have to wait until January 20 to see what actually happened before making any “major decisions,” and other suppliers and car manufacturers have expressed the same view.

During his first term, Trump used the threat of imposing tariffs on specific countries or even individual major automakers to push them to increase car production at US car manufacturing plants.

When Toyota (Toyota), the world's largest car manufacturer, announced plans to manufacture Corolla cars for American consumers in Mexico in early 2017, Trump posted on Twitter (now renamed X): “No! Either build a factory in the US or pay hefty border taxes.”

In just one year, Toyota announced a joint investment of at least 1.6 billion US dollars with Mazda to build an American automobile manufacturing plant in Alabama, and Trump also announced a major milestone victory for the “return of manufacturing to the US.”

More and more car suppliers are looking for “Made in America”

In response to US trade protectionism and large-scale supply chain shocks during the global COVID-19 pandemic, major suppliers in the automotive industry adopted a localized production model to avoid the risk of a shortage of core components or border taxes.

This process accelerated after the Biden administration passed the 2021 Infrastructure Redevelopment and Authorization Act. The bill is more of an incentive than a punitive measure, encouraging many suppliers, including Dowlais (Dowlais) in the UK, to increase their investment scale in the US market because they are signing contracts with car manufacturers seeking high subsidies for electric vehicles. It should be noted, however, that the incoming Trump administration plans to repeal parts of the 2021 Infrastructure Rehabilitation and Authorization Act.

Nicola Seetzer, CEO of Continental (Continental), one of the world's largest auto parts suppliers from Germany, said in an interview that after years of localizing more production scales in each region of operation to serve nearby customers, the company faces a stronger localization advantage and a smaller “Trump risk exposure” than “other companies in the automotive industry or our competitors.”

Continental is discussing with suppliers and car manufacturers in North America whether it is possible to provide alternative local components to enable the company to avoid tariffs. “As long as we can localize further and it makes sense to do so, we'll do it.”

Another automobile manufacturing giant from Japan, Honda Motor has an annual production capacity of about 0.2 million vehicles in Mexico, 80% of which are exported to the US market.

Speaking at a CES round table, Honda's executive vice president Noriya Kaihara said that depending on the tariff level, “we may have to consider changing production locations... from Mexico to Japan, or from Mexico to other locations.”

“We haven't officially decided what we can do, but we're elaborating on what we'll be able to do,” Kaihara added.

The possibility of imposing further new tariffs on Chinese goods has added new impetus to suppliers seeking alternative sources. Panasonic Energy (Panasonic Energy) is mainly responsible for supplying electric vehicle batteries to global electric vehicle leader Tesla (TSLA.US). The battery giant is already working to transfer more of its supply chain and battery production capacity to North America, including through supply agreements with synthetic graphite anode material producer Novonix and Canadian natural graphite manufacturer Nouveau Monde Graphite.

However, Alan Swan, president of Panasonic Energy North America, said in an interview that since Trump is about to come to power, the company is speeding up plans to eliminate all elements supplied by China in batteries made in the US. Swan said that at present, Chinese materials only account for a small portion of its entire electric vehicle battery supply chain.