By Sanjana Shivdas and Nick Carey
(Reuters) – Steel and aluminum tariffs imposed by the Trump administration has cost Ford Motor Co about $1 billion, its chief executive officer said on Wednesday.
“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 U.S. today anyway. If it goes on any longer, it will do more damage.” He did not specify what period the $1 billion covered.
Despite buying the vast majority of steel and aluminum for U.S. production domestically, the tariffs could result in higher domestic commodity prices, according to Ford.
Ford shares were down 0.7 percent at $9.32.
The United States said in March it would impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. The tariffs on the imports from most countries have allowed U.S. producers to raise their prices.
U.S. 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 a possible new round of tariffs. On May 23 Trump ordered a “Section 232” national security investigation into whether to impose a 25 percent tariff on vehicle and auto parts imported from the European Union and other trading partners.
The section, included in the U.S. 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 U.S. auto industry as well as the broader economy.
IHS Markit estimates that full implementation of the 232 tariffs would add between $1,800 and $5,700 to a new vehicle’s price tag and cut new auto sales by around 2.2 million units in 2020 as well as slice total sales to as little as 14.5 million units from expectations of 17 million vehicles this year.
The new tariffs would also cost around 300,000 in auto-related jobs in factories and dealerships across the country, and slash U.S. economic growth by 1.1 percentage points to 2.2 percent, IHS said.
In July Ford lowered its full-year earnings forecast due to slumping sales and trade tariffs on China as well as its struggling business in Europe.
The automaker’s difficulties in boosting sales in China have showed no signs of ending despite taking steps to bring new products to market.
(Reporting by Sanjana Shivdas in Bengaluru; Editing by Anil D’Silva and Jeffrey Benkoe)