Magna CEO Compares Tariff Impact to COVID, Chip Shortages, and the Great Recession

MAGNA International is raising the alarm — and it’s worth paying attention. Their CEO, Swamy Kotagiri, said recently the impact of tariffs on automotive imports is comparable to the industry suffering from COVID, the chip shortage and the Great Recession – all at once.

But first, what is Magna? Magna is a Canadian automotive parts manufacturer and a leading global supplier of mobility technology solutions. As North America’s largest auto supplier, the company employs more than 12,300 people in Michigan alone.

Magna designs, engineers, and manufactures a wide range of automotive systems, assemblies, modules, and components — everything from doors, liftgates, and headlights to truck frames and advanced driver assistance systems (ADAS). These parts are critical not only for original equipment manufacturer (OEM) production but also for service and collision repairs. Magna’s global footprint includes 342 manufacturing operations, and 91 product development, engineering, and sales centers spread across 27 countries. Their client list reads like a who’s who of the auto world: General Motors, Ford, Stellantis, BMW, Mercedes, Volkswagen, Toyota, Tesla, and Jaguar Land Rover, to name just a few.

At a recent Automotive Press Association event, Magna CEO Swamy Kotagiri issued a stark warning: the potential impact of tariffs on auto parts could feel worse than, COVID-19, the chip shortage, and the Great Recession, and warned that the effect could be like experiencing all 3 at once. He also highlighted the difficult decisions facing companies like Magna as they weigh reshoring production to the U.S.

“To build a plant like that — from breaking ground to being operational — takes about two years,” Kotagiri said during the event, held at Magna’s U.S. headquarters in Troy, Michigan. “You’re talking about facilities that are a million square feet. We’re not talking hundreds of millions — we’re talking billions. It’s not a flip of the switch.”

The financial strain from tariffs is especially concerning for Tier 1 and Tier 2 auto suppliers. These businesses often operate on thin margins and face significant financial risk when automakers reduce production — something already happening as Stellantis and General Motors have recently announced vehicle production cuts.

Suppliers typically invest heavily in materials and labor long before the cars themselves are assembled. If an automaker cancels or pauses a model, the supplier is left holding unsold inventory. Sometimes contracts allow them to sell this surplus as OEM overstock, but even then, the process of reselling takes time, extra effort, and often fails to fully recoup the losses.

While the intent behind tariffs is to encourage reshoring and bolster U.S. manufacturing, the unintended consequence could be reduced new vehicle production — a situation that may push smaller tier 1 and 2 suppliers closer to bankruptcy if the trend continues.