As tariffs begin to impact vehicle pricing, major automakers including Ford and Stellantis are revising their relationships with suppliers by imposing stricter contract terms aimed at offsetting rising costs.
According to Crain’s Detroit Business, both automakers are requiring suppliers to agree to more restrictive agreements as a condition for securing new business and potential tariff-related financial relief. This shift marks a significant change in how the automakers engage with their supply base amid economic uncertainty and increased regulatory costs.
Ford’s new contract terms reportedly eliminate a decades-old provision that allowed suppliers to opt out of agreements annually, a clause suppliers have historically used as leverage in negotiations. Suppliers hoping to secure new Ford contracts must now accept the revised terms, which remove this flexibility.
Stellantis is also distributing new term sheets to suppliers, reinforcing its ability to enforce contract provisions in light of recent legal disputes. “Our purchase orders have repeatedly and consistently been upheld by Michigan courts,” said Stellantis spokeswoman Jodi Tinson in an email to Crain’s Detroit Business. She added that Stellantis' tariff-related financial support for suppliers is confidential.
While Ford declined to comment on the changes, with spokeswoman Ursula Muller stating, “We don’t comment on supplier issues or contracts,” industry observers note the company has not always received high marks in studies of supplier relations. The contract changes suggest a pivot as Ford and its peers work to shield consumers and their own margins from tariff impacts.
Suppliers, operating with narrow margins, have made it clear they cannot absorb additional tariff costs and intend to pass them along. However, Ford and Stellantis appear to be absorbing some of those costs while tightening control over their supply chains through contractual adjustments.
As trade policy continues to evolve, these moves indicate automakers are preparing for prolonged financial pressure by reshaping long-standing supplier dynamics.
