Impact of local taxes, commercial agreements, and their influence on automotive transportation and inventory systems

In the dynamic world of international trade, several major changes are underway, with countries adjusting their strategies to navigate new tariff regulations.

Southeast Asia and China Face Pressure from U.S. Tariffs

Logistics providers in Southeast Asia and China are feeling the pressure from U.S. tariffs and raw material restrictions. Complex rules on country of origin and embedding materials are causing multiple tariff layers, necessitating detailed batch and origin tracking. Companies working with Chinese suppliers must separate their inventory by batch and origin to comply with U.S. regulations and embargoes. In response, these providers are enhancing logistics precision through strict batch segregation, digital customs compliance, and diversified sourcing strategies, such as sourcing from India or Malaysia to exploit different tariff treatments.

Japanese Carmakers Gain Advantage

Japanese carmakers are benefiting from moving cars directly to the U.S., avoiding tariffs that apply to nearshoring countries like Mexico or Canada. If in compliance with USMCA content rules, tariffs on cars and parts in these countries are at least 25%, potentially reaching 35%.

EU Tariffs Suspended, South Korea Commits to $350bn US Investment

The European Union has suspended retaliatory tariffs planned for the U.S., pausing duties on €93bn worth of U.S. exports, including automotive. Meanwhile, South Korea has committed to a $350bn investment in the U.S., with $200bn allocated for semiconductors and nuclear energy, and $150bn going towards shipbuilding in the U.S.

Tariffs Agreed upon in Japan, Indonesia, Philippines, Vietnam, and South Korea

The US has agreed on tariffs of 19% for vehicle imports and automotive parts imports with Japan, Indonesia, and the Philippines. Similarly, Vietnam's new trade framework with the U.S. promises 20% tariffs on its imports to the U.S., replacing a previously threatened 46% rate. The US and South Korea have agreed on tariffs of 15% for vehicle imports and automotive parts imports, replacing a previously threatened 25% rate.

US Imposes Tariffs on China, Steel, and EVs

The US has imposed preliminary anti-dumping tariffs of 93.5% on Chinese graphite imports, with tariffs potentially going up to 700% for specific companies, with the final duty rate to be determined at the end of this year. The US has also set tariffs of 50% on steel and aluminium imports from South Korea, affecting parts supply and driving up costs. US tariffs on Chinese-made EVs and battery components remain, posing routing challenges for European manufacturers with Chinese supply chain links.

Tariff Changes and Uncertainty in the Automotive Logistics Industry

The automotive logistics industry in South Korea faces uncertainty about when and how the tariff rates will be implemented. The US-Japan deal includes reducing vehicle imports and automotive parts imports from 27.5% to 15%, but the US raised tariffs on Canada to 35%, while higher tariffs on Mexico have been paused for another 90 days. Under the provisions of the USMCA, Mexico and Canada are likely to retain 25% tariffs on automotive parts and vehicle imports.

Partial US-UK Trade Deal and US-Vietnam Framework

The partial US-UK trade deal reduces tariffs on vehicle imports to 10%, but caps UK-built vehicle exports to the U.S. at 100,000 units annually. The US-Vietnam framework includes a 40% duty on transshipments from third countries, making it difficult for other countries in the ASEAN region or nearby to use nearshoring strategies around Vietnam.

Trump's "Done Deal" with China and the EU-US Framework

Trump's "done deal" with China on a trade framework for 55% tariffs on Chinese imports includes magnets and rare earth materials, but the details of this framework are yet to be revealed. The framework for the EU-US deal would place a 15% tariff on exports to the U.S., including vehicles and automotive parts.

These changes underscore the complex and evolving nature of global trade, as countries seek to protect their industries while maintaining open markets. The impact of these tariff changes on the global economy and individual industries will continue to unfold in the coming months.

Impact of local taxes, commercial agreements, and their influence on automotive transportation and inventory systems