How one of the largest auto suppliers in the world is preparing for Trump’s tariffs

By Nora Eckert

ST. CLAIR, Michigan (Reuters) – Walking through a Michigan plant past whirring robotic arms and flying sparks, Swamy Kotagiri, the CEO of Canada-based auto supplier Magna reflected on how he is trying to “control the uncontrollable” in the midst of industry-shaking tariffs.

“We’ve had a series of black-swan events,” Kotagiri said. “Our industry really prospers with certainty and cadence and stability. And that’s what’s been missing in the last four years.”

The vastness of Magna’s facility in Michigan underscores its role as a key cog in the intricate global auto supply chain. The company has 59 facilities in the United States, 50 in Canada, and another 33 in Mexico, part of the legacy of the 1990s North American Free Trade Agreement that produced a highly intertwined system of sending parts from one country – and then back again – to produce cars in some of the world’s largest markets.

But Kotagiri and other leaders of auto companies are now facing an upended industry. President Donald Trump’s 25% tariffs on foreign auto imports announced at the end of March are expected to raise consumer prices, reduce demand and hit job growth. Magna, with more than 170,000 employees across 28 countries, dwarfs most of its large customers, including the likes of Ford, General Motors and Toyota.

Speaking just hours before Trump called for the 25% tariffs, Kotagiri said there was no “easy way to absorb this,” saying much of the cost would be passed on to consumers. Trump’s levies are expected to add thousands of dollars in cost per vehicle and billions for automakers and suppliers, analysts say.

‘FLEXIBILITY IS KEY’

Magna has already weathered union strikes, a semiconductor shortage and lower-than-expected EV demand. In the face of tariffs, Kotagiri said Magna is trying to be as flexible as possible, including at its EV structures facility in St. Clair, Michigan, where it cranks out battery enclosures for vehicles like GM’s Hummer and Silverado EV. If needed, the supplier can reprogram those swinging robotic arms to assemble frames or engine cradles, Kotagiri said.

“The world changed,” Kotagiri said. “Flexibility is key. We need to have the footprint, the capacity and the expertise to help.”

But its success may also depend on smaller suppliers, who are likely even more distressed.

“If you talk to small and mid-sized suppliers that support, like a Magna, I mean, talk about panic,” said Laurie Harbour, whose team focuses on automotive suppliers at advisory firm Wipfli. “Their cost has gone up so much and the revenues are still so soft,” she said, adding that it is “putting pressure on their viability as a business.”