Trump brandishes the tariff stick, and the automotive supply chain groups head to the United States! Is the "manufacturing return to America" entering an accelerated phase?

According to the latest information revealed by the automotive industry executives attending the Consumer Electronics Show (CES) in Las Vegas, global automakers and automotive parts suppliers are studying how much production capacity they can transfer to the United States or closer to the United States in response to the further imposition of tariffs promised by President-elect Donald Trump. If these major manufacturers and parts suppliers in the global automotive market collectively shift their production capacity to the United States, it means that Trump's "manufacturing reshoring to America" is no longer an empty populist slogan, but an actual process that is accelerating. The automotive industry has been experiencing a period of "American protectionism" for as long as eight years, from the actual and threatening tariffs imposed during Trump's first term, to the continuation of Trump's tariff measures and the American Inflation Reduction Act during President Joe Biden's term, the so-called "America First" has become the core starting point of all American policies. Most of these measures are directly aimed at China and the Asian region, especially the significant proposal put forward by the Biden administration to ban China National Software & Service and hardware from being used on American roads. But the soon-to-be-officially-inaugurated Trump has vowed to take even further radical measures, striving to bring manufacturing back to the United States and make America great again (the so-called "MAGA"). Trump's plan is to impose a 10% blanket tariff on all imported goods to the United States on January 20th, and impose tariffs of up to 60% on Chinese goods. In late November, he even specifically promised to impose tariffs of up to 25% on imported goods from Canada and Mexico after his inauguration on January 20th. Automotive giants follow the footsteps of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to set up factories in the United States Such high tariffs will be difficult to pass on to all consumers and will make core automotive parts produced in low-cost markets uneconomical, or, in the case of China alone, it will be almost impossible for some China-focused export companies to sell any products in the American market. Therefore, some core manufacturers in the global automotive supply chain are considering shifting production to the United States, or closer to the United States, with companies like Bosch and Continental even exploring localized production in the United States to evade tariffs. Under the pressure of tariffs, Trump's "manufacturing reshoring to America" seems to be accelerating. Not only are semiconductor manufacturing giants from Asia such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Samsung Electronics, and SK Hynix striving to establish themselves in the United States for "pure American manufacturing" of the most advanced process chip products, but also automakers and automotive parts suppliers from around the world are planning for localized production in the United States. It is reported that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's wafer fab in Arizona, USA, which began adopting the N4P process technology in September last year after years of construction, is subcontracting A16 bio-level smartphone chips for Apple Inc. in small volumes, and is currently rumored to have begun subcontracting chips for the Apple Watch series. "Anybody can do the math," said Paul Thomas, President of North America at Bosch, the world's largest automotive parts supplier, in an interview. "If tariffs are 10%, 20%, 60%... you have to rethink: well, how many scenarios are reasonable and what actions should we take to deal with it?" "We've already begun working on several important projects before he (Trump) took office." During the CES Tech Show, Thomas cited a theoretical example - that Bosch is currently producing generic electronic control units in Malaysia or similar markets, but now "we are considering production in Mexico or Brazil... regions where we are already involved," he said. Thomas added that Bosch may have to wait until January 20th to see what actually happens before making any "major decisions," and other suppliers and automakers have expressed similar views. In his first term, Trump used threats of imposing tariffs on specific countries or even individual major automakers to encourage them to increase car production at US car manufacturing plants. When the world's largest automaker, Toyota Motor Corp. Sponsored ADR (Toyota), announced plans to produce Corolla cars for American consumers in Mexico in early 2017, Trump tweeted, "No! Either build in the United States or pay a high border tax." Within a year, Toyota announced a joint investment of at least $1.6 billion with Mazda to build a US car manufacturing plant in Alabama, and Trump also announced a significant milestone victory in bringing manufacturing back to America. More and more automotive suppliers seek "Made in America" During the global COVID-19 pandemic, major core suppliers in the automotive industry have adopted a localized production model to address American trade protectionism and disruptions in the supply chain, in order to avoid the risks of core components shortages or border taxes. With the passage of the Infrastructure Rebuilding and Authorization Act of 2021 by the Biden administration, this process has accelerated. The act is more of an incentive rather than a punitive measure, encouraging many suppliers, including England's Dowlais, to increase their investment in the American market, as they are signing contracts with automakers seeking high subsidies for electric vehicles. However, it is worth noting that the incoming Trump administration plans to abolish the Infrastructure Act of 2021.Partial contents of the Facilities Rebuilding and Authorization Act.One of the world's largest automotive parts suppliers from Germany, Continental CEO Nikolai Setzer, said in an interview that after many years of localizing production to better serve nearby customers in each operational region, the company has a stronger localization advantage compared to "other companies in the automotive industry or our competitors" and faces a smaller "Trump risk exposure". Continental is discussing with suppliers and automakers in North America whether alternative local parts can be provided to avoid tariffs. "As long as we can further localize and it makes sense, we will do it." Another automotive giant from Japan, Honda Motor Co., Ltd. Sponsored ADR, has an annual production capacity of about 200,000 vehicles in Mexico, with 80% exported to the US market. Noriya Kaihara, Executive Vice President of Honda, said at a roundtable meeting at CES that due to tariff levels, "we may have to consider changing production locations...from Mexico to Japan, or from Mexico to elsewhere." "We have not officially determined what we can do, but we are detailing what we will be able to do," Kaihara added. The possibility of further new tariff measures on Chinese goods has added new impetus for suppliers seeking alternative sources. Panasonic Energy is the main supplier of electric vehicle batteries for the global electric vehicle leader Tesla, Inc. (TSLA.US), and this battery giant is working to shift 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 the company is accelerating plans to eliminate all Chinese supply elements from batteries made in the US as Trump prepares to take office. Swan stated that currently, Chinese materials only make up a small part of their entire electric vehicle battery supply chain.