Aluminum and steel tariffs that the White House administration imposed earlier this year will cost carmaker Ford Motor Co. $1 billion in profits, said its CEO Wednesday, while Japanese carmaker Honda Motor said that higher prices of steel have brought the company new costs in the hundreds of millions of dollars.
Ford CEO James Hackett during an interview said from the perspective of the company the tariffs on metals took approximately $1 billion in profit away from us. Hackett added that the irony was the company sources the majority of that in the U.S. anyway. If the tariffs continue any longer, more damage will be done.
Hackett was not specific in what period the loss in profits covered but a Ford spokesperson said the CEO of the automaker had been referring to company internal forecasts for costs related to the tariffs in 2018 and 2019.
The rise in steel prices in the U.S. resulted in new annual costs in the hundreds of millions of dollars said Rick Schostek the Honda North America executive vice president to the Finance Committee of the U.S. Senate, even though over 90% of the steel sourced by the company in vehicles that are U.S. assembled is domestic.
Honda is facing retaliatory tariffs as well from China and Canada on its lawn mowers that are built in North Carolina as well as transmissions it makes in Georgia.
U.S. prices for vehicles have not been increased as of yet by Honda due to the higher costs however, but that issue is part of the company’s thinking moving forward, said Schostek to reporters following the hearing on Capitol Hill.
While the overwhelming majority of aluminum and steel Ford uses for production in the U.S. is domestically made, it said that the tariffs could result in higher U.S. commodity prices.
Ford stock was down slightly in Wednesday afternoon trading following the release of Hackett’s comments.
In March, the U.S. said it was imposing a tariff of 25% on imported steel and one of 10% on imported aluminum from the most nations. Those tariffs have in turned allowed producers of aluminum and steel in the U.S. to raise prices.
The tariffs on aluminum and steel put in place by the White House will in turn boost the prices for cars through hiking the costs of commodities for manufacturers, warned automakers.
Trump during his campaign for the presidency lambasted trade deficits in the U.S. as being detrimental to U.S. workers and manufacturers.