News / Tariffs driving regional supply chain shift opens avenues for automotive

Automotive opportunities are opening up for foreign countries from the move to regionalisation provoked by the US administration’s shake-up of global supply chains.

However, with a major US carmaker contemplating ending its operations there, South Korea could end up a loser.

But in Brazil, Rodolfo Boraschi, recently appointed head of automotive at AGL Cargo, said he had seen a lot of interest from leading manufacturers that see Brazil as a potential hub for LatAm and beyond.

“Our work is split between imports – primarily from Asia, North America and Europe – and growing export flows to countries like Argentina, Chile, Mexico, and some African markets,” Mr Boraschi told The Loadstar.

“There is strong demand from OEMs which have set up or expanded operations to leverage favourable production conditions, we are approved providers for VW Group, Nissan, HPE Automotive, BYD and others, as well as partners for tier-1 and -2 suppliers.”

Mr Boraschi said that, since Donald Trump’s return to the White House, there were “several” multinationals reassessing their global supply chains, planning to shift away from the recent “China+1” towards other, more regionalised production strategies.

And Brazil, it seems, has been attracting interest, presenting logistics operators with opportunities to capitalise on the move to grow not only the domestic manufacturing market, but also to meet increasing regional consumer demand.

“We’re seeing increased interest in sourcing and manufacturing within Mercosur countries to shorten supply chains, improve responsiveness, and reduce geopolitical risk – Brazil’s ‘green’ energy production and diplomatic neutrality makes it welcoming,” Mr Boracschi explained.

“At the same time, reshoring is also a push for more quality control and transparency across shorter, more intense supply chains.”

In terms of what this means for AGL, he said, the company had seen more intra-regional flows, with a stronger emphasis on customs efficiency, near-shoring logistics and supplier onboarding that was impacting traditional models.

He added: “While this trend might impact different production models, such as just-in-time inventory and make-to-order, creating pressure on lead times, we responded by strengthening our inland transportation network and investing in integrated customs brokerage services.”

Trump-driven pressure may be working to the benefit of Brazil, but one country positioned somewhat more precariously is South Korea, where the largest automaker in the US, General Motors, manufactures some 17% of its North American sales.

Now it seems GM is reportedly considering axing its South Korean manufacturing operations, having already set in the motion the process of selling service centres and any under-used facilities in the country, including assets at its Bupyeong District plant.

Local outlets suggest the divestments mark the begining of a move towards a phased withdrawal from South Korea, as GM contends with the 25% tariff President Trump slapped on automotive imports from the country.

That phased approach may be partly driven by the carmaker’s obligation to continuing manufacturing in South Korea until at least 2027, a condition of the $60m support package it received from Seoul after attempts to withdraw in 2018.