Trade War Watch: Ford Blames Trump for Sky-high Steel Prices

Ford Motor Co. is blaming Donald Trump’s commodity tariffs for elevating U.S. steel prices higher than any other market on the planet. Regardless of your opinion on the president’s policies (the economy is reportedly booming), it’s a little hard to rebuff Ford’s criticisms on this one. The automaker’s now going straight to the source in an attempt to remedy the situation.

Trump hasn’t gone easy on Ford. He spent a large portion of his presidential campaign coming down on the automaker over its plan to move small-car production to Mexico. However, the company’s about-face proved a short-lived victory — it ultimately decided to stop selling cars altogether. This was followed by Ford’s cull of the upcoming Focus Active in North America after Trump’s 25 percent levy on Chinese-built vehicle made the introduction impossible (and unprofitable).

While it’s relatively easy to paint Trump as the villain in this picture, China actually imposes even higher import tariffs (40 percent) on vehicles coming from the United States. Ford’s attempts to bolster volume in that market haven’t met with much recent success. Meanwhile, the administration’s decision to re-examine Obama-era fuel economy standards threw every automaker a bone.

If anything, this is a conflict of interests. Trump doesn’t want the United States to lose any more ground to China than it already has, and Ford needs to make money. A feud was inevitable.

“U.S. steel costs are more than anywhere else in the world,” Joe Hinrichs, Ford’s president of global operations, said during Monday’s production launch of the Ford Ranger.

According to Bloomberg, the executive said Ford has reached out to administration to see what can be done. “We tell them that we need to have competitive costs in our market in order to compete around the world,” Hinrichs confirmed.

Last month, Ford CEO Jim Hackett urged the White House to end trade disputes as quickly as possible. He said the company experienced a $1 billion blow to its bottom line, despite procuring the majority of its steel from within the United States.

From Bloomberg:

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.

“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.”

We don’t see that happening any time soon. China would have very little to gain by playing nice with the United States, given that almost every company in the world is desperate to do business there. Likewise, Trump has made The People’s Republic one of his chief economic concerns, and the president doesn’t have a history of being the first to extend an olive branch.

[Image: Ford Motor Co.]