President Donald Trump’s plan to impose tariffs on steel and aluminum may increase the cost of buying a car, automakers warned.
Continue Reading Below
Trump announced that he intends to approve tariffs of 25% on steel and 10% on aluminum next week. The specter of a trade war and higher costs for U.S. manufacturers sent stocks into a tailspin, with General Motors losing 4.9% of its market value in two days. Commerce Secretary Wilbur Ross said the tariffs are necessary to protect U.S. jobs, arguing that costs would only increase marginally.
But the move could force automakers to raise sticker prices in the long run, even though U.S. auto factories mostly rely on domestic steel. The American Automotive Policy Council is “concerned with the unintended consequences” of imposing metal tariffs, saying higher domestic prices would put U.S. automakers at a competitive disadvantage.
Toyota, which built more than 1.2 million cars in the U.S. last year and plans to build a new $1.6 billion factory with Mazda in Alabama, said it will incur higher costs associated with the tariffs.
“The administration’s decision to impose substantial steel and aluminum tariffs will adversely impact automakers, the automotive supplier community and consumers, as this would substantially raise costs and therefore prices of cars and trucks sold in America,” a Toyota spokesperson said.
Ford said higher U.S. commodity prices will harm the competitiveness of American manufacturers, “despite the fact that Ford buys the vast majority of its steel and aluminum for U.S. production in the U.S.”
Ford is one of the industry’s largest buyers of aluminum. Its F-Series trucks feature an aluminum body, unlike competing models from GM and Fiat Chrysler’s Ram. GM’s 2019 Chevrolet Silverado, scheduled to go on sale in the fall, will use aluminum for the doors, hood and tailgate.
Ross, speaking in an interview with FOX Business’ Stuart Varney on “Varney & Co.,” said in a typical vehicle with one ton of steel, a 25% tariff would amount to 0.5% of the price of a car. That’s a $177 price increase for a new vehicle, based on February’s average transaction price of $35,444, according to Kelley Blue Book.
Ross added that cheaper steel and aluminum imported by U.S. manufacturing companies have stunted job growth.
“Corporate America may complain,” he said. “The president is taking up the banner of Mr. and Mrs. America.”
|GM||GENERAL MOTORS COMPANY||36.35||-1.23||-3.27%|
|F||FORD MOTOR COMPANY||10.75||-0.35||-3.15%|
|TM||TOYOTA MOTOR CO||127.02||-2.26||-1.75%|
Like Toyota, GM taps local suppliers for 90% of the steel and aluminum it uses to build vehicles in the U.S. Whatever the impact, the nation’s largest automaker said it will adapt to any market changes related to the tariffs.
“We need to better understand the details around the announcement today, but the bottom line is we support trade policies that enable U.S. manufacturers to win and grow jobs in the U.S, and at the same time succeed in global markets,” GM said in a statement.