Automotive manufacturers are feeling the heat from the Trump aluminium and steel tariffs as noted by Ford Motor Company’s CEO James Hackett, who said on Wednesday that his firm is expected to lose approximately US$1 billion to the measures over the next two years.
“From Ford’s perspective the metals tariffs took about $1 billion in profit from us,” said Hackett in the course of a financial conference in New York City. “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.”
Though Hackett was not specific as to dates, a spokesman for the firm said that the number was derived from internal forecasts regarding operations this year and next.
Despite the fact that the lion’s share of aluminium and steel that goes into Ford vehicles is sourced domestically, the firm noted that tariffs may also lead to a rise in overall commodity prices.
Japanese automaker Honda is also suffering “hundreds of millions of dollars” in increased costs due to the tariffs. In recent testimony to the U.S. Senate Finance Committee, executive vice president of Honda North America Rick Schostek said that the tariffs spiked production costs in its vehicles assembled in the United States despite the fact that they also use almost exclusively domestically-sourced metals.
Schostek continued by saying that Honda has held the line on vehicle prices to date, but raising them “certainly part of our thinking as we go forward.”
Meanwhile, at a briefing in Detroit, analytics data firm IHS Markit warned that a full implementation of the Trump tariffs could add between US$$1,800 and US$5,700 to the sticker price of new automobiles. The company continued by noting that such a rise is likely to slice off up to 2.2 million sales in 2020, dropping total sales that year to 14.5 million units and costing the industry about 300,000 jobs. Projected sales this year are expected to total 17 million units.