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

Matt Posky
by Matt Posky
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.]

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4 of 26 comments
  • Duaney Duaney on Oct 23, 2018

    Good grief! My comment about the "high price" for steel, why then is steel scrap so pitifully low then?? Only $80 a ton. Someone's not being truthful here. And China, they've been getting away with murder for years, it's time they competed fairly with us. And technology, it's been proven that whenever technology increases, it creates more jobs than takes jobs away. This has been demonstrated over and over in our history.

    • See 1 previous
    • JimZ JimZ on Oct 24, 2018

      because scrap is a big pile of pieces of unknown grades of steel and rust. you can't really separate it out, so it all has to be melted down and re-alloyed. and the industry's increasing use of high strength and ultra high strength alloys means recyclers are basically starting only one step past refining virgin ore.

  • Prancer cise Prancer cise on Oct 25, 2018

    Echos of the past. Relaxing of fuel standards for domestic products while the entirety of the rest of the world is tightening them. American products will lag far (farther) behind all foreign competition, further reducing demand from other countries. When these policies inevitably become untenable, American companies will be caught with their pants down (again) taking decades to catch up. Giving up on a world market, and the fastest growing ones, for some feel good nationalism.

  • Vap65689119 As a release engineer I also worked in quality, if they are serious they should look at Toyotas business model which has their suppliers as genuine partners, thats how you get a quality product
  • Mike-NB2 I seem to have landed in an alternate universe. $12,000 for a Jeep that's going on a quarter-century old and with an automatic transmission? Wow.
  • Stuart de Baker This driver wants physical knobs and buttons that are easy to use while keeping eyes on the road, and does not want effin screens that require eyeballs to be taken off of roads, mfgs be damned.
  • Tassos 25 years old, 200k miles, $12,000 devalued worthless Biden Dollars?Hard pass.
  • GrumpyOldMan Lost me at the last word of the second paragraph.