Trump’s Metals Tariffs Have Cost Ford $1 Billion, Are Causing Rising Car Prices

Published on September 26, 2018 by Athena Pallas

Negative impacts from President Trump’s metals tariffs are already being felt by U.S. automakers and consumers. Ford Motor Company’s CEO James Hackett says that these tariffs have already cost the company $1 billion, a somewhat astonishing figure that would seem to indicate the company will have no choice but to pass along the increased costs to customers. And of course Ford is not the only company so impacted and all U.S. car buyers face the prospect of increased prices. The American Automotive Policy Council estimates that the current tariffs will raise the price of a car by $400. Trump has threatened further tariffs of 25% on not just foreign cars, but also auto parts imports, which, according to The Hill, could raise new car prices by $6,000 to $7,000 per car.

President Trump has claimed that his tariffs and overall trade policy are meant to bolster U.S. industry, but the effect of those tariffs and overall trade policy has been to hurt industry and consumers with increased costs. Retaliatory tariffs have also shrunk export markets for agricultural products, causing a need for billions of dollars in partial government relief for farmers. Ford’s CEO cites that its $1 billion in losses actually stems from it using U.S. suppliers, who are in turn are needing to avail themselves of foreign steel and aluminum in order to fill their orders, and of course that steel and aluminum is subject to Trump’s 25% and 10% tariffs, respectively. According to The Hill:

Ford Motor Company CEO James Hackett said Wednesday that steel and aluminum tariffs have cost the automaker $1 billion. Tariffs severely hurt the company because most of their supply came from U.S. suppliers, Hackett said at the Bloomberg business forum conference in New York City, Reuters reported…A wide range of businesses from auto dealers to labor unions say the tariffs are hitting hard. The American Automotive Policy Council estimates steel and aluminum tariffs will cause a $400 per car price increase. Besides steel and aluminum tariffs, there is growing concern from automakers and businesses involved in the industry about the Trump administration’s Section 232 investigation into whether a 25 percent tariff should be imposed on foreign autos and auto parts…If Trump decides to impose the 25 percent tariffs, consumers would likely see new car prices rise $6,000 to $7,000 per vehicle.

Despite objections from industry, from agriculturalists, from consumers, from Congress (even some prominent Republicans), and from economists, President Trump has been unwilling to change course on his tariffs and unilateral trade policies. Another major problem with Trump’s tariffs is his authority, or lack thereof, to impose them. The president only has the authority to impose tariffs for reasons of national security; tariffs for any other reason have to be approved by Congress. So, President Trump has claimed national security was the reason for his imposing the tariffs, but that reason seems very unlikely for key allies facing these tariffs, like Canada and the EU, so it seems more likely that the real reason is other than national security for many of these tariffs, in which case Trump is exceeding his authority by imposing these tariffs.

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Featured image by Gage Skidmore via Wikimedia Commons.