The Future of Automotive Trade: Tariff Storm Ahead
As the automotive sector accounts for approximately 11% of global trade in manufactured goods, analysts at Bernstein are predicting a turbulent trade environment ahead due to rising tariffs. The intricate supply chain of the automotive industry, with over 15,000 parts in a typical vehicle, has been supported by decades of falling tariffs that allowed for seamless global supply chains.
Europe emerges as a key player in automotive trade, with the EU accounting for a significant portion of finished car exports and broader sector exports. However, the shift towards electric vehicles (EVs) is reshaping the landscape, with China expected to dominate battery manufacturing by 2030.
The transition to EVs brings logistical changes, as vehicles will have fewer components but will require new goods and spare parts flows to be managed. Moreover, the era of ever-freer trade is coming to an end, as countries like the U.S. and EU have imposed substantial tariffs on EV imports from China.
These tariff increases are likely to alter the structure of global automotive supply chains, leading to more goods flowing through third countries. Bernstein predicts that this will create a more complex trade environment, driving demand for logistics services and increasing the profit pool for freight forwarding companies.
In conclusion, investors and individuals in the automotive industry need to remain vigilant and adapt to the changing trade dynamics to navigate the evolving landscape successfully. The future of automotive trade is uncertain, but with strategic planning and foresight, opportunities for growth and profitability can still be seized amidst the tariff storm.