Federal Reserve Automotive Insights Symposium 2026: What You Need to Know

Top Takeaways:

• The industry fought the sticker-shock from tariffs through absorption, reshoring, and restructuring.
• Margins, not demand, were the clearest near-term casualty, with OEMs taking the bigger hit.
• Suppliers’ planning resumed as the tariff plans stabilized, but their pessimism remained high.

Kicking off the Federal Reserve Bank of Chicago – Detroit Branch’s 32nd Annual Automotive Insights Symposium, Policy Advisor Kristin Dziczek described 2025 as a “shock absorber” year: with President Donald Trump’s sudden announcements of tariff changes, uncertainty rose quickly within the automotive and mobility industry, and plans paused. But by Q3, the industry steadied as conditions clarified.

“Automakers are clearly absorbing the bulk of the recent shocks,” she said.

Dziczek outlined actions from the industry throughout 2025 and noted the government collected just over $200 billion from January to October, with the auto and auto parts share of total duties peaking at 25.7% in July before easing to 18% in October. She also highlighted that the automotive tariff compliance level has increased: the share of U.S. sales built in the U.S. rose from 51% to 57%, while domestic light vehicle exports fell 20% and imports fell 13%.

Despite expectations of bigger price shocks, Dziczek noted that as of October, average tariffs per vehicle were up 552% year-over-year, while the average transaction price was up only 2.1%.

She shared a multitude of reasons why the industry has been more resilient amid the tariff changes, including pre-tariff inventories, supply chain reshoring and adjustments, and relief measures such as the federal government’s Import Adjustment Offset program.

Looking forward to 2026, Dziczek predicted that AI and automation will continue to change factories and vehicles, and also noted that trade will retake center stage as the U.S.-Mexico-Canada Agreement (USMCA) review begins in June.

Top Takeaways:

• Stable, predictable policy, especially around USMCA, is critical to restoring confidence and unlocking long‑term investment.
• China’s real advantage is scale, speed, and consistency, forcing U.S. firms to cut structural costs and accelerate innovation.
• Automakers must fund the future while protecting profits today, letting consumers, not mandates, set the pace of transition.

Building on the theme of long‑term competitiveness amid policy and market uncertainty, Jennifer Thomas of American Honda Motor Company said, “The key to success while operating in this dynamic environment will be maintaining flexibility, resilience, keeping the focus on the future, investing in infrastructure, etc.”

One of the most critical barriers to this success is China, especially “considering their overcapacity situation for production,” Thomas said. She also emphasized the need for industry leaders and policymakers to unite against this threat by lessening dependency on materials from China.

“We need to acknowledge that our industry is too dependent on China, especially on rare earths and critical components like semiconductor chips or legacy chips,” Thomas said.

Adding to Thomas’s perspective, Daniel Kennel of Borg Warner, a MichAuto investor, noted the significance of scale among leading players.

“China created an incredible amount of scale with the governmental push towards Neighborhood Electric Vehicles (NEVs),” Kennel said. “But also outside NEVs, if you think about Southeast Asia, South America, probably every third car is a Chinese car already. And I think that’s the most important thing. If you want to compete, you need scale. And I think that’s what they’re doing.”

Continuing the discussion on industry challenges, Thomas highlighted the importance of stable, predictable policies to ensure competitiveness. She noted, “policy kind of got ahead of the consumer in the past few years,” and emphasized that “the pace of adoption needs to be dictated by consumers, rather than by mandates.”

Along with the need for predictable policies, Thomas underscored the critical importance of maintaining USMCA as a trilateral agreement, establishing a federal autonomous vehicle framework, and improving the industry’s communication with policymakers about the effects of shifting regulations.

Wrapping up the conversation, Kennel, from a supplier’s perspective, said that suppliers must pair a market‑driven product portfolio with an agile operating model, a balanced global‑local supply chain, and deep customer partnerships, so the right decisions are made quickly, close to both the customer and the market.

Top Takeaways:

• Automation, AI, and robotics have shifted from an emerging technology to a core driver of manufacturing competitiveness across industries.
• Labor shortages are pushing manufacturers to deploy automation that supports human workers, stabilizes production, and reduces costly shutdowns rather than replacing people outright.
• The most successful automation strategies focus on redesigning systems around the problem, not forcing robots to imitate human behavior.

After a cautious 2025 marked by uncertainty and labor shortages, 2026 is emerging as a pivotal year, with AI and robotics regaining strong momentum in automation.

Mike Cicco of FANUC America Corporation argued that effective automation should start by “looking at what the problem is and not necessarily how the person currently does it. We try to solve the problem in the most effective way possible, not trying to recreate exactly what the person does step by step.”

Cicco noted that many companies pursue humanoid robots to mimic people despite the immense complexity and dexterity of human capabilities, especially the human hand. Instead, the recommended approach is to redesign processes for automation, using simpler and more reliable industrial robotics solutions that remove challenges humans can easily compensate for, such as stabilizing moving parts.

As the automotive industry transitions into a more automated and digital world, Staffan Olsson of Autoliv stated, “When it comes to engineers and maintenance, they need to understand more how to work with PNC programming and work with integrated solutions when it comes to the colleagues working at the assembly lines. But when we are employing new people, we need to have good collaboration with technical schools.”

Top Takeaways:

• U.S.-Mexico-Canada Agreement (USMCA) remains the backbone of North American competitiveness, but its durability now hinges on enforcement, simplification, and sustained congressional engagement.
• Trade policy has entered an era of uncertainty driven by China, national security, and experimental tariffs, where outcomes are unclear, and volatility is the norm.
• The U.S. risks losing credibility as a reliable trading partner unless it reinforces a rules‑based system and scales agreements beyond North America.

“USMCA, looking at all the free trade agreements in the world. This is the most consequential agreement on the planet,” Former U.S. Rep. Kevin Brady of Akin Gump said.

With upcoming USMCA renegotiations, both Brady and Chad Bown of the Peterson Institute for International Economics agree that it’s critical to strengthen the agreement, preserve its key elements, and extend it for as long as we can.

As a result of President Donald Trump modernizing the agreement six years ago, Brady said that “Mexico and Canada, together, are America’s top customers, top investors, and top suppliers.”

“If you were a successful business and you had a customer who was not just your best customer, but also your biggest investor, your most important supplier, what would you do with that relationship?” Brady asked. “Would you discard it, or would you build upon it and strengthen it, especially when you’ve got China out there eager to eat our lunch?”

Bown outlined new topics to be discussed under the agreement, ranging from prioritizing rules of origin to wage provisions to new labor standards.

“It would be great if we could also do this [agreement] with Japan, Korea, and Europe and get a bit more scale by including those economies, combine us, and be closer to China’s size when it comes to scale, and it allows us to specialize more in different things,” Bown said.

Lastly, the ongoing USMCA dispute centers on President Trump’s use of Section 232 tariffs, which allow the president to unilaterally impose tariffs on imports that threaten national security. This has raised constitutional concerns and, more importantly, cast doubt on whether the U.S. can be seen as a reliable trading partner, even with side agreements meant to exempt Canada and Mexico.

When asked directly whether the U.S. is currently a reliable trading partner, Bown was candid, saying, “I don’t think so at the moment.”