Stellantis Alerts Dealers to Competitive Threat from New Tariffs

WASHINGTON, March 4 (Reuters) – Stellantis has informed its U.S. dealers that new 25% tariffs on imports from Canada and Mexico could significantly disadvantage its Chrysler, Dodge, Jeep, and Ram brands against foreign competitors from Asia and Europe. The company is currently seeking relief from the Trump administration regarding these tariffs, according to an email obtained by Reuters.

The email outlines concerns that these tariffs will elevate costs and potentially lead to price hikes for consumers, ultimately impacting sales. “These tariffs will put Stellantis’ flagship brands at a competitive disadvantage versus Korean, Japanese, and European importers, which are not facing similar tariffs at this time,” the email stated.

Stellantis executives have highlighted the lengthy and integrated supply chains within North America, developed over 25 years, which may be disrupted by the additional tariffs. Automakers warn that such challenges could affect vehicle pricing and availability almost immediately. According to John Bozzella, president of the Alliance for Automotive Innovation, a trade group representing major automakers, “All will be impacted by these tariffs on Canada and Mexico,” predicting that some vehicle models might see price increases of up to 25%.

The concerns extend to Stellantis’ profitability in 2024, which has already faced challenges. The automaker’s reliance on imports from its neighbors exacerbates its vulnerability. Additionally, Stellantis is still managing restructuring efforts that may be further complicated by looming tariff implications.

Relations with Stellantis’ dealership networks, already tense, may deteriorate due to these tariffs. In late 2024, a group of dealers sent an open letter criticizing former CEO Carlos Tavares’ strategy as “disastrous,” leading to his departure less than a year later. A replacement for Tavares has yet to be named, leaving uncertainty within the company.

Early reports indicated potential production adjustments at Stellantis’ Ontario assembly plant, which was paused for retooling on February 21. While a spokesperson for Stellantis suggested this was part of a necessary reassessment of their North American product lineup, Unifor National President Lana Payne noted that ongoing trade disputes could also be influencing these decisions. “The chaos and uncertainty plaguing the North American auto industry, which is under the constant threat of tariffs, are having real-time impacts on workers and corporate decisions,” Payne stated.

In a communication on Tuesday, Stellantis reiterated its commitment to working with the government to address the tariff situation. Despite the impending cost burden, the automaker emphasized direct engagement with officials as they navigate this challenging landscape.

Automakers have consistently raised concerns about the tariffs’ implications during meetings with Commerce Secretary Howard Lutnick. Ford‘s leadership recently echoed these worries, stating that 25% tariffs could “blow a hole” in the U.S. auto industry, noting significant financial strains due to rising costs.

The United Auto Workers praised the administration’s efforts in pursuing tariff actions that they believe could favor domestic workers, expressing hope for productive collaboration moving forward. The American International Automobile Dealers Association highlighted the dual pressures of rising prices and high-interest rates that dealers are already facing, cautioning that tariffs could mean thousands of additional dollars on vehicle sticker prices.