The aluminum and steel tariffs levied by the Trump Administration took nearly US$ 1 billion in profit from Ford Motor Co, the irony of this being that the company sources most of these profits from the U.S. Hackett has encouraged the President Trump’s administration in resolving trade disputes as soon as possible, as it could further the damage to the company. Hackett states that the company is already suffering from the tariffs levied by the White House.
A deal is impending on the New York Free Trade Agreement, with a new implying NAFTA to be closed soon, and North America and Europe making tremendous progress relating to vehicle discussions. Global automakers, along with Ford, have opposed president’s use of tariffs, and retaliation they spur. President of Ford, Jim Farley, describes Trump’s tariffs on aluminum and steel as significant headwind for automakers.
Higher steel cost in the U.S. have added millions of dollars in the additional annual costs, while bulk of steel used in Ford’s vehicles assembled is produced domestically in the U.S. Additionally, Honda faces retaliatory tariffs from China and Canada on lawn mowers that are manufactured in North Carolina. Albeit Honda has not increased its vehicle prices in the U.S. owing to higher costs, the issue is likely to change their pricing status quo in the near future.
The tariffs are expected to lead toward greater domestic commodity costs, while vast majority of aluminum and steel used by Ford for its vehicle production in the U.S. is made domestically. The auto industry is now bracing for the imminent round of tariff, with the order of section 232 national security investigation that would impose 25% tariff on auto parts and vehicles imported from the trading partners, including the European Union.
The new tariff can also result in cost of nearly 300,000 appertaining to jobs in automobile industry, and dealerships across the nation. Ford recently lowered its annual earnings forecast against the backdrop of trade tariffs and slumping sales in China, and its dampening business in Europe. However, Ford’s challenges in bolstering sales in China show no signs of ceasing, despite steps taken to introduce new products to the market.