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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

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As automotive suppliers navigate a year defined by shifting tariff announcements, postponements, reductions and renegotiations, Homayune Ghaussi explores what should be considered before signing year-end “tariff reimbursement” agreements. In his recent article for MEMA, “Tis the Season for Tariff Agreements,” Ghaussi outlines why these proposals — often framed as relief — may carry risks that are not immediately apparent.

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Ghaussi, a partner in Warner’s <a href="https://www.wnj.com/industries/automotive/" target="_blank" rel="noreferrer noopener">Automotive Industry Group</a>, notes a flurry of OEM-issued agreements seeking to designate suppliers for tariff offsets or reimburse certain tariff costs. But while these proposals arrive in the “season of giving,” he cautions that not all presents are a gift. Suppliers must understand not only what reimbursement, if any, they are receiving, but also the terms, concessions and obligations they may be agreeing to in return.

He explains that many proposed agreements use broad or discretionary language that may not guarantee repayment of tariff costs, and in some cases include conditions that allow OEMs to negate payment obligations altogether. “Signing may not guarantee recovery,” Ghaussi writes, especially when the agreement contains multiple avenues for an OEM to avoid reimbursement.

In addition to uncertain relief, some proposals require suppliers to give up protections unrelated to tariffs, such as expanded audit rights, limitations on future claims, or even explicit permission for OEMs to re-source work. Terms may also impose new responsibilities — such as obligations to mitigate tariff exposure or secure similar agreements with other customers.

Ghaussi further highlights that several agreements include reservation-of-rights language, allowing OEMs to potentially later revisit or claw back any relief provided under the original supply terms. These provisions, he notes, can leave suppliers exposed even after reimbursement occurs.

While the emergence of tariff relief agreements may signal progress toward easing supplier burden, Ghaussi underscores that careful review is essential. Without a full understanding of both the benefits and the potential pitfalls, suppliers risk opening the door to what he describes as a “Trojan Horse.”

The full article can be accessed <a href="https://www.mema.org/news/ahead-curve-q4-legal-corner" target="_blank" rel="noreferrer noopener">here</a> and found in MEMA’s newsletter, Ahead of the Curve Q4: Legal Corner.

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Homayune A. Ghaussi

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Homayune Ghaussi Examines Year-End Tariff Agreements

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Homayune Ghaussi Examines Year-End Tariff Agreements

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