NEW YORK: Steel and aluminium 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 Motor Co 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 at a Bloomberg conference in New York, “The irony of which is we source most of that in the US 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 US 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 US 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 US 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 aluminium that Ford uses for US production is made domestically, it has said the tariffs could result in higher domestic commodity prices.
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 aluminium from most countries. The tariffs have allowed US producers to raise their prices.
US President Donald Trump’s steel and aluminium tariffs will boost car prices by hiking commodity costs for manufacturers, automakers have warned. During the presidential campaign, Trump lambasted US 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 a possible new round of 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, included in the US Trade Expansion Act, allows the president to adjust imports through tariffs if they threaten national security.
At a briefing in Detroit on Wednesday, officials from analytics data firm IHS Markit said if the Trump administration imposed the Section 232 tariffs globally, it would have far-reaching consequences for the US auto industry as well as the broader economy.
— Reuters
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