Auto suppliers Novares, Valeo demand upfront payment to cover tariff cost

PARIS (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.

(Reporting by Gilles Guillaume, additional reporting Alessandro Parodi. Editing by Dominique Patton and David Evans)