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French car parts supplier Forvia has said it expects an “enormous” hit for the industry from Donald Trump’s tariffs, in one of the clearest signs yet of the likely impact of new US trade restrictions on the automotive sector.
The group, whose clients include Stellantis, Tesla and China’s BYD, has estimated that tariffs could raise annual costs by between €200mn and €450mn before it takes defensive measures. The figures come from details of internal discussions obtained by the Financial Times and confirmed by the company on Tuesday.
US President Donald Trump on Monday confirmed that he would substantially raise trade barriers in North America by going ahead with threatened 25 per cent tariffs on goods coming from Canada and Mexico. Tariffs represent a particularly severe problem for the automotive sector, which has one of the most complex and international supply chains.
Olivier Durand, Forvia’s chief financial officer, said in an interview that the tariffs were “enormous for the automotive industry”.
“Putting 25 per cent on significant flows of purchases for the sum of the industry automatically has a very significant impact,” he said.
Forvia, which makes products from car seats to battery packs, has a market capitalisation of €1.7bn. It has a large manufacturing presence in Mexico, which the company has said is the part of the business most exposed to the new tariffs.
The upper €450mn upper estimate for the costs would equate to more than two-thirds of Forvia’s 2024 cash flow of €655mn.
Durand said the estimated figures were a “mechanical total” of the extra costs that tariffs would represent. He added that the company expected the impact to be closer to the €200mn lower figure and that it anticipated measures to pass on costs would mitigate the effect.
The upper, €450mn estimate factors in the potential effect of tariffs on “mandated” parts — components and other items that manufacturers specify Forvia must use when making certain products for them.
However, Forvia expects that manufacturers will pay tariffs on such products, rather than Forvia.
“The mandated part doesn’t concern us,” Durand said, adding that the “raw figure” for exposure before the company took any action to mitigate it would be closer to €200mn than €450mn.
The handling of any extra costs from tariffs on mandated products would be subject to negotiations between carmakers and suppliers, Durand added.
“It will be up to the carmakers to see with their providers how they deal with the subject,” he said.
On Tuesday, Durand said the company was preparing to take measures to tackle tariffs, including increasing the capacity and number of shifts for workers at its US manufacturing plants. It would also negotiate with clients and providers to raise prices.
In the interview, Durand said the business could reduce the “final impact” to between zero and €20mn after it took measures to tackle the tariffs.
“It’s clear that these are high totals because activity is integrated, but we are prepared to respond,” he said.
He added that Trump’s last-minute decision in early February to delay the imposition of tariffs by 30 days had helped Forvia to prepare detailed plans.
However, he acknowledged that tariffs could also lead to inflation that would also affect sales. He accepted that Forvia would have to negotiate with customers the level of any price increases it wished to levy to offset the effects of tariffs.
When it reported results on Friday, Forvia included in its financial guidance for 2025 measures “already enforced” by the US, but did not provide guidance on additional tariffs on Mexico and Canada.
On Friday, after Forvia reported annual results, concerns over tariffs and its debt levels prompted a fall in the company’s shares of more than 20 per cent. Shares in rival Valeo also dropped more than 10 per cent.
Durand also confirmed that 4,000 people had left the company in 2024. The company stated in its results that 2,900 people had left under ongoing reduction plans, but the larger figure also included employees whose contracts were not renewed, Durand added.
