Rewritten Article
ZF's Head Holger Klein asserted that tariffs in this region are especially burdensome for the company's suppliers.
Holger Klein, CEO of ZF, expresses worry about the potential impact of US tariffs on Mexico's auto market and the overall industry. These tariffs have the potential to smother an already shaky market and inflate consumer prices.
Keenly aware of the trade tensions between the US and China, with both sides imposing steep tariffs on each other, Klein is especially vigilant about Trump's policies towards Mexico. As a vital market for ZF, alongside China, Mexico could experience towering tariffs, a situation that isn't ideal for the world's leading automotive supplier.
During a recent interview with the FAZ, on the sidelines of the Shanghai Auto Show, Klein clarified where he was most apprehensive. "ZF barely exports from China to the US. It's the Mexican tariffs that concern us more," Klein admitted. Mexico serves as an extension of US workshops for the auto industry, with certain production processes relocated there.
While tariffs may seem like a mere business concern, they could have far-reaching implications for consumers. "The auto market is what I'm most concerned about, given the expected price increases," Klein warned.
The Importance of Contractual Terms in Tariff Distribution
The question of who foots the tariff bill is the paramount concern, according to Klein. This is where Incoterms (International Commercial Terms) come into play, setting the parameters for shipping responsibilities and expenses, including tariffs.
"If the contracts state that the customer picks up the goods at our factory, the customer is accountable for customs clearance. If they deliver to the US themselves, the tariff costs remain with them," Klein explained.
In many cases, clients pick up the goods in Mexico with ZF. However, Klein cautions that the supplier will still feel the sting of the tariffs: "The tariffs hurt the industry as a whole, nobody is exempt."
The escalating trade conflicts, coupled with the intricacies of Incoterms, necessitate careful examination of logistics strategies to navigate these challenging times effectively. Klein urged both ZF and its clients to closely scrutinize their contractual agreements to understand and distribute tariff costs appropriately.
- Holger Klein, the CEO of ZF, shared concerns about the potential impact of US tariffs on Mexico's auto market and the distribution industry, particularly since Mexico is a crucial market for ZF.
- Klein emphasized the importance of contractual terms in tariff distribution, stating that Incoterms, which outline shipping responsibilities and expenses, including tariffs, play a significant role in determining who bears the tariff costs.
- He explained that if clients pick up the goods in Mexico with ZF, the suppliers will still feel the effects of the tariffs, as they impact the industry as a whole.
- In light of these escalating trade conflicts and the intricacies of Incoterms, Klein urged both ZF and its clients to carefully scrutinize their contractual agreements to understand and distribute tariff costs appropriately.
