Ford Ratchets Up Rebuke of Trump Tariffs as Steel Costs Rise

(Bloomberg) -- Ford Motor Co. said Donald Trump’s tariffs have made steel more expensive in the U.S. than any other market, escalating the company’s criticism of the president’s trade war.

“U.S. steel costs are more than anywhere else in the world,” Joe Hinrichs, Ford’s president of global operations, said Monday at an event marking the start of Ranger pickup production at a factory west of Detroit. He added that Ford is talking to the administration about the tariffs: “We tell them that we need to have competitive costs in our market in order to compete around the world.”

Ford Chief Executive Officer Jim Hackett last month called on President Donald Trump’s administration to resolve trade disputes quickly, warning that they would otherwise do more damage to the second-largest American automaker. He said the company sustained a roughly $1 billion hit to profit despite the fact that it sources most of its metals from the U.S.

Domestic hot-rolled coil -- the benchmark price for American-made steel -- has gained 28 percent in 2018 as the Trump administration implemented tariffs on imports. The levies helped push prices to about $920 a metric ton earlier this year, the highest in a decade. U.S. steel currently costs about $260 more per short ton than steel in China, which accounts for more than half of global demand.

‘Babies’

Trump has portrayed his levies as key to getting other countries to cow to his trade demands. When celebrating a trade deal with Canada and Mexico to replace Nafta earlier this month, he referred to those who have complained about tariffs as “babies.” The president also accused motorcycle manufacturer Harley-Davidson Inc. of using them as an excuse to move jobs overseas.

It’s been a rocky road for relations between Ford and Trump. He repeatedly attacked the company on the campaign trail in 2016 for announcing its intention to move small-car production to Mexico. The automaker earned the president-elect’s praise for nixing that plan weeks before his inauguration.

Trump has since answered a call by Ford and other carmakers for the U.S. to re-examine fuel economy standards set by the Obama administration. The company received this relief with some trepidation, clarifying that it wasn’t asking for a rollback to rules and didn’t want the federal government to battle states led by California over their tougher standards.

China Challenges

Trump’s steel and aluminum tariffs aren’t the only way in which his trade policies have had an impact on Ford. In August, the automaker scrapped a plan to sell a new model called the Focus Active in North America. Ford cited the U.S. slapping an additional 25 percent levy on vehicles imported from China, where the crossover will be built.

President Xi Jinping has gone tit-for-tat with Trump, matching his 40 percent tariff on imported vehicles. That’s led Ford to reduce American exports to China, particularly of Lincoln models that it’s trying to sell in the world’s biggest auto market.

While Ford only imports a small number of vehicles into China, it’s been struggling mightily in the market. Sales there have declined in 14 of the last 15 months and plunged 43 percent in September, as trade tensions combine with a stale lineup and dearth of sport utility vehicles to drag on demand.

“We encourage all counties -- but especially the U.S. and China -- to work together,” Hinrichs said. “We think it’s in the global economy’s interest to do so.”

©2018 Bloomberg L.P.