Many suppliers are on shaky financial ground, having been saddled with debt to invest in electric-vehicle production that fell short of expectations. (Bill Pugliano/Getty Images)
Jeep owner Stellantis NV is willing to help its suppliers pay tariff costs to withstand the initial shock of President Donald Trump’s trade war.
The automaker has outlined a program in which suppliers would apply for help from the company to make monthly tariff payments to the U.S. government, according to a person familiar with the matter. Marlo Vitous, Stellantis’ head of purchasing in North America, laid out the plan during a meeting with suppliers in Detroit last week, the person said.
It’s unclear what percentage of the cost Stellantis is willing to pay and suppliers would have to meet a number of requirements in order to qualify for the program, said the person, who asked to not be identified discussing the plans because they aren’t public.
Stellantis declined to comment.
The discussions highlight how the auto industry is beginning to digest the initial fallout from Trump’s escalating trade war. A 25% tariff on U.S. automobile imports took effect April 3, while a levy on parts is slated to begin no later than May 3. The measures are expected to dramatically increase costs and upend supply chains.
Stellantis, which also makes Ram, Chrysler and Dodge vehicles, last week said it would temporarily halt production at plants in Canada and Mexico in response to the levies, triggering hundreds of layoffs in the U.S. The company and other carmakers also rolled out discounted pricing and other measures to keep shoppers coming to dealerships.
Many suppliers are on shaky financial ground, having been saddled with debt to invest in electric-vehicle production that fell short of expectations. Some parts makers are now pushing automakers to help them absorb the cost of tariffs.
“They’re talking, with bated breath, about being willing to support suppliers with costs associated with tariffs,” said Mitch Zajac, an automotive and supply chain attorney with Butzel Long in Detroit who is advising clients on Stellantis’ plan.
Parts makers must make tariff payments to Customs and Border Protection before their goods can be cleared to enter the U.S., Zajac said. Rather than raise the price of components in supplier contracts, Stellantis is discussing a monthly lump sum payment for eligible suppliers to help defray that cost, he said.
“There will be some sort of assessment of the criticality of the parts perhaps, or the ability to re-source or dual-source the parts,” Zajac said, cautioning that the money is not guaranteed and it’s still early in the process.
Stellantis shares declined 6.2% as of 12:41 p.m. on April 7 as the broader market declined. The automaker’s stock is down about 30% this year.
