Tariffs Are Reshaping Auto Supply Chains and Creating M&A Opportunities
Antonio Pereira, Allan Nackan, and Gaston Mauvezin examine how the 2025 tariff regime has redefined automotive supply chains—and why 2026 will intensify these shifts. With further policy changes and regionalization on the horizon, executives face a critical window to leverage M&A for scale, resilience, and compliance advantages. This disruption isn’t temporary—it’s setting the stage for the industry’s next era.
The 2025 tariff regime has done more than raise costs. It has fundamentally altered how the automotive industry operates. What started as a US trade policy tool has become a structural force, pushing OEMs and suppliers to rethink sourcing strategies, production footprints, and compliance frameworks. This creates an opportunity for strategic realignment and M&A.
The Tariff Shock: More Than a Cost Issue
Tariffs on imported vehicles and auto parts – sometimes as high as 25% – have reset and disrupted the economics of global automotive supply chains. Together with duties on steel and aluminum, you’re looking at potential industry-wide cost increases north of $85 billion annually. These pressures cascade through every tier of the supply chain, from OEMs down to Tier-3 suppliers, creating liquidity strain and operational uncertainty.
That said, tariffs are not just a financial burden. They are a catalyst for structural change. Companies are accelerating onshoring, reconfiguring supplier networks, and investing in compliance automation to navigate complex origin rules. And that makes this environment ripe for strategic consolidation.
What Executives Need to Know
-
Supplier Distress = Acquisition Targets
Liquidity pressure and compliance complexity are pushing smaller Tier-2 and Tier-3 suppliers toward restructuring. Many simply don’t have the capital to absorb tariff-driven cost spikes or invest in digital compliance systems. For well-capitalized players, this creates an opportunity to acquire distressed assets, lock in critical capacity, and diversify sourcing.
Why it matters: Consolidation stabilizes fragile supply chains and delivers scale advantages in OEM negotiations.
Action point: Target suppliers in high-tariff categories (electronics, powertrain components) and those with partial North American operations that can scale quickly.
-
Regionalization Is the New Premium
OEMs are prioritizing North American content to reduce tariff exposure and qualify for USMCA benefits. This shift elevates the strategic value of suppliers with domestic footprint or nearshoring capabilities in Mexico and Canada.
Why it matters: Regionalization cuts tariff risk, shortens lead times, and aligns with OEMs’ push for supply chain resilience.
Action point: Acquire suppliers with existing U.S., Canadian, or Mexican facilities or invest in joint ventures that enable rapid localization of critical components.
-
Compliance as a Differentiator
Digital traceability and origin verification are “table stakes” now. Suppliers that can demonstrate robust compliance systems will win OEM trust and avoid costly penalties. M&A deals that integrate compliance tech can unlock synergies and reduce risk.
Why it matters: Compliance failures trigger retroactive duties, fines, and reputational damage.
Action point: Look for targets with advanced ERP and trade compliance platforms or plan post-acquisition investments to standardize compliance across your portfolio.
-
EV Components Drive Strategic Value
Electrification adds another layer of complexity. Battery modules, power electronics, and semiconductors are tariff-sensitive and subject to industrial policy incentives. Consolidation in these areas offers long-term margin protection and positions acquirers for growth in the EV segment.
Why it matters: EV supply chains are capital-intensive and vulnerable to geopolitical risk. Owning critical nodes secures future competitiveness.
Action point: Prioritize acquisitions in battery pack assembly, inverter manufacturing, and semiconductor packaging—where tariffs and technology converge.
Why M&A Makes Sense Now
Tariffs have compressed margins and increased operational risk, but they’ve also created valuation gaps. Distressed suppliers are trading at discounts, while strategic buyers with strong balance sheets can leverage synergies in procurement, compliance, and logistics. Consolidation accelerates regionalization, a trend that’s unlikely to reverse even if tariffs ease.
What’s driving deals:
- Onshoring momentum – Companies are moving offshore operations to the U.S. to eliminate tariff risk and qualify for local content credits. It’s capital-intensive, which makes partnerships and acquisitions attractive.
- Dual sourcing strategies – OEMs demand redundancy in critical components. Acquiring suppliers in complementary geographies strengthens resilience.
- Technology integration – Compliance and traceability platforms are becoming M&A deal drivers. Digital capability is now a competitive advantage.
Managing the Risks
The opportunity is compelling, but M&A in this environment carries risks:
- Policy volatility – Tariff structures can change quickly. Mitigate by modeling multiple scenarios and building flexibility into deal terms.
- Integration complexity – Combining operations across borders requires careful planning, especially for compliance and IT systems.
- Capital allocation – Onshoring investments can strain cash flow. Structure deals with earn-outs or staged payments to preserve liquidity.
Bottom Line: Adaptability Is the New Core Competency
Tariffs have turned supply chain resilience into a strategic imperative. For investors and executives, this is the moment to buy scale, secure domestic capacity, and embed compliance advantage. M&A isn’t just a growth lever, it’s a survival strategy in a tariff-driven world.
The winners will be those who act decisively: acquiring distressed suppliers, investing in compliance technology, and aligning footprints with the new reality of regionalized production. Tariffs have rewritten the playbook. Those who embrace the shift will define the next era of automotive competitiveness.
How We Can Help at GlassRatner
GlassRatner is a leading provider of specialty professional and advisory services. Our team of more than 200 people operates seamlessly across North America. We specialize in Restructuring, Turnaround Management & Bankruptcy Consulting; Forensic Accounting & Litigation Support; Transaction Support Services (such as Due Diligence and Quality of Earnings Reviews); Engineering & Construction Consulting; and Executive Search & Interim Management.
Our team members across the U.S., Canada, and Mexico have deep experience in automotive manufacturing and supply chain, including management, financing, restructuring, and buying and selling automotive businesses. We can help with:
- Restructuring underperforming businesses
- Acquiring distressed assets or businesses
- M&A Transaction Support, including buy-side and sell-side advisory, valuation, and due diligence
- Acquiring the right talent on a permanent or interim basis to support your business needs
- International reach through our partnership in BTG Global Advisory, which is particularly relevant for automotive businesses and supply chains with global footprints
