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Auto suppliers Novares, Valeo demand upfront payment to cover tariff cost
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Auto suppliers Novares, Valeo demand upfront payment to cover tariff cost
Apr 10, 2025 8:14 AM

PARIS, April 10 (Reuters) - French automotive suppliers

Novares and Valeo are asking customers to cover the

full cost of new U.S. duties upfront, company executives said,

underlining the hit to global carmakers from President Donald

Trump's tariffs on car imports.

The U.S. began collecting tariffs of 25% on foreign auto

imports from April 3, which Trump says will boost U.S.

manufacturing and jobs.

But the measure, which remains in place even after Trump

paused reciprocal tariffs on trade partners on Wednesday, is

expected to raise car prices by thousands of dollars, reducing

demand and hurting job growth.

Suppliers, already under pressure from recent years' switch

to electric vehicles with fewer parts, say they are in no

position to absorb any of the cost.

Pierre Boulet, chairman of France's Novares, which supplies

plastic parts to one in three vehicles produced worldwide said

"for us, it's simple," either payment in advance "or no customs

clearance."

The privately owned company has five factories in Mexico,

with some of its products now subject to the new U.S. duties.

Valeo, a specialist in driver assistance and lighting

systems, is also asking customers to pay the full tariff cost,

including both automakers assembling cars in the U.S. and

American spare parts distributors.

"We are working to obtain full compensation for the new

customs duties, passing on 100% of the corresponding costs to

our customers, and we have already obtained the agreement of

more than 50% of them," said Valeo chief executive Christophe

Perillat.

"For spare parts, we are taking the same approach," he

added.

Valeo has 13 factories in Mexico.

Only a portion of imports from Mexico and Canada are

currently affected by the duties, as components that comply with

the 2020 USMCA free trade agreement are exempt.

But more products could face duties from May 3.

Most goods shipped by tyre maker Michelin from

both countries to the U.S. are currently also exempt from the

new tariffs, the company told analysts late on Wednesday,

according to a transcript of a conference call.

But it added that no definitive conclusions can be made yet

on a topic that is "evolving by the day". The group produces

around 70% of the tyres it sells in the U.S. on American soil,

with the remainder imported from Canada and Mexico.

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