Trump tariffs take ‘about $1B’ from Ford

DETROIT • Steel and aluminum tariffs imposed by the Trump administration have cost Ford Motor Co. about $1 billion in profits, its chief executive officer said on Wednesday, while Honda said higher steel prices have brought “hundreds of millions of dollars” in new costs.

“From Ford’s perspective the metals tariffs took about $1 billion in profit from us,” CEO James Hackett said in New York, “the irony of which is we source most of that in the U.S. today anyway. If it goes on any longer, it will do more damage.”

Hackett did not specify what period the $1 billion covered, but a spokesman said the automaker’s CEO was referring to internal forecasts at Ford for higher tariff-related costs in 2018 and 2019.

Higher U.S. steel prices have resulted in “hundreds of millions of dollars” in additional annual costs, Rick Schostek, executive vice president of Honda North America, told the U.S. Senate Finance Committee, even as more than 90 per cent of steel in its vehicles assembled in the United States is made domestically.

Honda also faces retaliatory tariffs from Canada and China on lawn-mowers it builds in North Carolina and transmissions made in Georgia.

Honda has not boosted U.S. vehicle prices as a result of the higher costs but the issue is “certainly part of our thinking as we go forward,” Schostek told reporters after the hearing.

While the vast majority of steel and aluminum that Ford uses for U.S. production is made domestically, it has said the tariffs could result in higher domestic commodity prices.

Ford shares closed down 0.12 per cent at $9.27 on Wednesday.

The United States said in March it would impose a 25 per cent tariff on imported steel and a 10 per cent tariff on imported aluminum from most countries. The tariffs have allowed U.S. producers to raise their prices.

President Donald Trump’s steel and aluminum tariffs will boost car prices by hiking commodity costs for manufacturers, automakers have warned.

During the presidential campaign, Trump lambasted U.S. trade deficits as detrimental to American manufacturers and workers.

Since taking office, Trump has pursued a policy of escalating tariffs that he says will reverse that trend, including waging an increasingly bitter trade war with China.

The auto industry is bracing for possible new tariffs. On May 23 Trump ordered a “Section 232” national security investigation into whether to impose a 25 per cent tariff on vehicle and auto parts imported from the European Union and other trading partners.

The section allows the president to adjust imports through tariffs if they threaten national security.