Vehicle manufacturers said in various earnings announcements Wednesday that the Trump administration’s new tariffs have had a strongly negative effect, driving up prices of raw materials while lowering sales. The reports come as tensions between the administration and the E.U. have apparently lessened following a positive meeting between President Trump and European Commission President Jean-Claude Juncker Wednesday afternoon.
“Recent and significant increases in commodity costs and unfavorable foreign exchange impact of the Argentine peso and Brazilian real have negatively affected business expectations. The company expects these headwinds to continue through 2018,” General Motors told investors Wednesday, referring to U.S. tariffs on steel and aluminum imports. GM said the adverse conditions would cost it $1 billion in 2018.
“The big challenge we’re having right now is on raw materials, especially aluminum and steel,” GM Chief Financial Officer Chuck Stevens said.
GM CEO Mary Barra nevertheless sidestepped the issue when asked by analyst about the tariffs’ impact. “I would just focus on the fact it’s in everyone’s best interest to have a strong U.S. auto industry. We spend a lot of time with the administration to make sure everyone understands that,” she said.
Motorcycle company Harley-Davidson said it expected to see raw materials costs rise by $15 to $20 million in the coming year thanks to U.S. tariffs, and that E.U. retaliatory tariffs on U.S. exports would cost it an additional $30-$35 million. Ford said that the tariffs raised its costs $145 million and expected them to continue to rise as high as $600 million for the full year.
The U.S. currently imposes a 2.5 percent tariff on foreign cars while the E.U. imposes a 10 percent tariff. The Trump administration has also proposed additional 25 percent tariffs on foreign autos and auto parts imports. These would follow the 25 percent tariffs on imported steel and 10 percent tariffs on imported aluminum that Trump instituted earlier this year. E.U. officials have retaliated with tariffs on $3 billion worth of U.S. goods, and vowed even greater levies should the U.S. follow through with its auto plans.
Both sides appear to be stepping back from the fight. In a joint press conference Wednesday, Trump and Juncker said they planned to “immediately” establish a negotiating team tasked with finding a way to eliminate all tariffs, barriers, and subsidies between U.S. and Europe.
