By Mathias de Rozario
(Reuters) -French car parts supplier Valeo (EPA:VLOF) said on Tuesday that 90% of the products produced by the group in Mexico and imported into the U.S. are now compliant with the United States-Mexico-Canada-Agreement (USMCA).
President Donald Trump’s broad threats of tariffs and their erratic implementation have raised fears of global supply chain disruptions and rattled industries heavily focused on the U.S. market.
However, goods complying with the USMCA trade deal are excluded from Trump’s duties.
"Valeo has implemented measures to mitigate the direct impact of tariffs, conducting an exhaustive review of its supply chain in order to do everything it can to reduce the basis for the new tariffs," the company said in an announcement of its first-quarter results.
Later, in a call with journalists, CEO Christophe Perillat said Valeo was, for example, moving plastic moulds - used to produce car parts - from China to other parts of the world, particularly Mexico or the U.S., to be USMCA compliant.
"We reduce the impact and then we negotiate the residual impact with our customers with an objective that is very clear internally, which is a net-zero objective," Perillat said.
The group, which is seeking agreements to obtain full compensation from customers for tariffs, said it has already signed deals covering more than 75% of the amounts concerned.
Valeo is confident it will complete discussions with customers on a 100% compensation of tariffs by the end of the second quarter, Perillat said in a call with analysts.
He added that the talks are progressing well enough to give Valeo the confidence to confirm its full-year guidance.
The group also accelerated its restructuring and savings programme, which it expects will generate total savings of 150 million euros ($171 million) in 2025.
"We are working in a very fundamental way, not simply to cancel this or that expenditure, but to commit to a sustainable and recurring cost reduction that will make Valeo stronger in the long term," Perillat told the journalists’ call.
The company is seeking to complete implementation of the programme before the end of the first half of the year, ahead of schedule.
Valeo reported a 2.1% drop in its first-quarter sales to 5.31 billion euros, in line with the company-provided consensus.
($1 = 0.8777 euros)