By on October 23, 2018

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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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26 Comments on “Trade War Watch: Ford Blames Trump for Sky-high Steel Prices...”

  • avatar

    >>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.<<

    Not really. China has everything to lose because of the huge imbalance and by now most companies realize China will tolerate foreign companies long enough to steal their tech for themselves.

    China is the bad actor, not the US. And it appears Chinese growth is stalling and it's economy not living up to expectations.

    • 0 avatar

      Japan used to be the bad guy, they were eating everyone’s lunch with their undervalued yen. They were finally brought to heel so to speak (stopped artificially depressing their currency) and things evened out. Japan tanked for a decade, but now has reached a reasonable co-existence in the global community it seems.

  • avatar

    Hackett loves using Trump as a scapegoat. In this way Hackett can defect attention away from his own incompetence. Remember, it was not Trump who decided to cancel Ford’s entire sedan lineup. Fords stock price is in the tank due to Hackett’s inability to effectly outline the company’s future.

  • avatar

    Ford’s stock is in the crapper. Ford blames everyone but themselves for the woes of the company. Ford cancels their old and outdated cars because the sales were disappointing.

    I think it’s time for a good old fashioned death watch to start for Ford. TTAC needs some fresh material and a new death watch series might just be just the trick.

  • avatar

    Not surprised. Trump isn’t smart enough to win a trade war with China because he’s not a good businessman. (Hell, he’s not smart enough to call the Saudis on their sh!t, and they’re as stupid as they are corrupt.) China is now the hottest market and all he’s managed to do is shoot the U.S. in the foot instead of using global pressure to hold them accountable.

    • 0 avatar

      China is finally being held accountable for their miserable and unfair trade practices. I doubt the US will be the only country to play tough with them. There are a lot of inherent problems with China as a nation and as an economy/marketplace. Ford needs to shut up and suck it up, as this too shall pass, and when it does we will be better off because of it.

      • 0 avatar

        Hah… Ford has a legitimate beef. Trump’s tariffs have provided a billion dollar handout from Ford to the steel industry as they address supply and demand issues created by Trump’s policies.

    • 0 avatar

      If you are smarter than Trump – run for presidency and win election. To win war with China do nothing just wait until their “hot” economy collapses. All hot economies collapse sooner than later (e.g.dotcom or roaring 20s)

      • 0 avatar

        “If you are smarter than Trump – run for presidency and win election.”

        No can do……

        Wasn’t born in the USA or Kenya!

      • 0 avatar

        @Inside Looking Out:
        “To win war with China do nothing just wait until their “hot” economy collapses. All hot economies collapse sooner than later (e.g.dotcom or roaring 20s)”

        You have a fundamental misconception about international trade.

        If China’s economy were to collapse, that wod be bad for American businesses, because they would be able to buy and sell less stuff.

        International trade benefits both nations. This is why fighting a trade war by making it harder to do business across borders cases a lotmof self inflicted economic pain. That’s why everyone with even a basic understanding of macroeconomics has been screaming at their TVs ever since Trump was elected.

        There are issues with trade that need to be solved — I would provide a very long list, if it wouldn’t distract from my main point. But, a collapse of China’s economy will tank our economy too — which is not winning a trade war by any stretch of the imagination. When you inflicted pain on trading partners, you share in the pain.

    • 0 avatar

      He even bankrupted a Casino! If he was the stellar businessman and deal maker he thinks he is, he would be in league with casino magnate Sheldon Addelson. Instead he has zero credit with US banks due to his string of bankruptcies over the years.

  • avatar
    White Shadow

    Ford should stop crying about steel prices when they make their most popular vehicle out of aluminum.

    • 0 avatar

      that doesn’t make a godd**n lick of sense.

      • 0 avatar

        It’s just the body of the F-150 that’s made from aluminum.

        The rest of the the vehicle is mostly made from steel, plus the body of every other vehicle they make.

        Even if you were correct, you’d still be suggesting Ford scrap even *more* of their lineup than they already have.

  • avatar

    Standing up to China is long overdue, despite the TDS of some writers.

  • avatar

    What a disgrace!

  • avatar

    Hah! Soon robotic production will compete effectively with low wage Asian countries. The USA will get manufacturing back but rank & file jobs. Haha suckers. Enjoy your food stamps kiddies.

    • 0 avatar

      Either your one of those “suckers” on food stamps or you sent that reply from your bus to school this morning. Any one with a nominal understanding of economics would understand that food stamps is a burden on everyone paying into the system.

      Eventually all jobs can be claimed by robotics, oddly those who perceive themselves of being high intelligence seem to think they are immune and manufacturing is the greatest at risk segment. Sure many smaller tasks have already been lost to robots but other industries stand to lose a lot more jobs a lot quicker than manufacturing.
      Large multinational businesses stand to lose just as many if not more. A robot can gather information from multiple different sources and cAlculate an outcome or a suggested reaction and implement it a lot more successfully than many humans. As soon as all these systems are programmed to interact with each other and make data driven solutions then many banks, and financial firms are going to be firing in droves.
      Similarly many kids are opting for online courses in high school in lieu of going to classes with peers. additionally, the package delivery industry is rapidly employing more technology to sort and load packages.

      • 0 avatar

        “Any one with a nominal understanding of economics would understand that food stamps is a burden on everyone paying into the system.”

        I’d rather pay a little into the system so poor people can have *something* to eat, rather than having someone stick a gun or a knife in my side demanding my wallet so he can feed his kids.

        this is a lot more interconnected and complex than your “waaaahhhh evil libruhl wants to give my money to THOSE people” whining.

        • 0 avatar

          The more welfare, the more family disintegration, the more crime.

          • 0 avatar

            thelaine’s got it. I’d rather help people get a job (be it through tariffs or whatever else) so they can support their family than just further promote the system of pop a kid out-> receive another paycheck. Having lived in a working class community ravaged by deindustrialization, simply replacing work with welfare is not a viable solution.

  • avatar

    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.

    • 0 avatar

      Someone still needs to melt it and there is no capacity in the US since most of these facilities have been shut down for years.

    • 0 avatar

      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.

  • avatar
    Prancer cise

    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.

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