Stellantis said that it would furlough 900 workers at five plants in the US and temporarily shut production in Canada and Mexico, marking the first major fallout on American automotive workers from President Donald Trump’s newly launched tariff war.
The manufacturer of the Jeep, Ram and Chrysler brands announced the temporary job cuts only seven hours after a 25 per cent tariff on all foreign cars imported into the US went into effect.
Trump has touted the tariffs as a way to bring manufacturing back to the US, but analysts have warned of massive disruption to global automotive supply chains and job risks as prices of US vehicles rise and sales of vehicles decline.
Stellantis said transmission, stamping and casting facilities in Michigan and Indiana would be affected given that they provide parts to the assembly plants in Canada and Mexico. The plant in Windsor will pause production for two weeks from next week, while its plant in Toluca will be shut for a month.
In an internal memo sent out on Thursday morning, Antonio Filosa, the group’s North American head, said the company was still assessing the medium and long-term effects of the new US tariffs, but he warned that “immediate actions” were warranted.
“These are actions that we do not take lightly, but they are necessary given the current market dynamics,” said Filosa.
Mexico and Canada, which play a critical role in the automotive supply chain, were spared from the so-called reciprocal tariffs against US trading partners that Trump unveiled on Wednesday.
Vehicles shipped from the two countries that are compliant with the 2020 US-Mexico-Canada Agreement will remain exempt from the tariffs. However, the production cost of vehicles from Canada and Mexico will still rise given non-US components will face tariffs.
However, Stellantis added that the 25 per cent tariff on foreign assembled vehicles would initially be applied regardless of USMCA exemptions until the value of the US components could be finalised.
Michigan consultancy Anderson Economic Group said that autoworkers would be affected not only in Mexico and Canada, but also in Michigan, Ohio, Indiana, Texas, South Carolina and Alabama — all of which voted for Trump.
Founder Patrick Anderson said the economics of running a car plant broke down when production was cut. “You will see sales decline. Sales decline leads to losses of jobs. Those losses of jobs are likely to overwhelm whatever increases of jobs you’re likely to get from moving production into a [US] domestic area.”
Stellantis is better placed compared with other European and Japanese carmakers because it manufactures 60 per cent of vehicles sold in the US domestically but some of the remaining 40 per cent are subject to the new 25 per cent tariffs.
Even before the tariffs, Stellantis had struggled with rising inventories in the US and weak vehicle demand in Europe, triggering the abrupt departure of its chief executive Carlos Tavares last year.
Under the interim leadership of chair John Elkann, the company has tried to build stronger ties with the Trump administration with promises of a multibillion-dollar investment in the US.
Elkann and other US groups also lobbied aggressively for carmakers that have invested heavily to build vehicles in North America be spared from Trump’s tariff war. Nevertheless the US president went ahead with the tariffs that executives warned would hurt the entire car industry, including US brands.
