As Ford Takes a Hit, Hackett Appeals to Trump to End Trade Disputes

Ford’s decision to construct the current-generation F-150’s body purely of aluminum paid off in terms of lightweighting, fuel economy, and sales, but rising commodity costs over the past couple of years eroded some of the financial benefit. There’s far greater headaches facing Ford these days, as the industry grapples with tariffs on not just imported aluminum and steel, but vehicles as well.

A second income-sucking tariff hit in July, when the U.S. applied an import duty of 25 percent on a slew of Chinese goods, prompting China to up its own tariffs on American goods, including automobiles. Ford isn’t having it. Having already lost $1 billion in profit, CEO Jim Hackett has a message for President Trump.

If the U.S. doesn’t resolve its trade disputes in a hurry, expect Ford to suffer even more, Hackett claimed.

In an interview with Bloomberg, the CEO said, “The metals tariffs took about $1 billion in profit from us — and the irony is we source most of that in the U.S. today anyways.” He added, “If it goes on longer, there will be more damage.”

Ford sources 95 percent of its steel from U.S. producers and suppliers, with 98 percent of the company’s aluminum bought from domestic sources.

As we reported earlier this week, Ford Motor Company sales in China dropped 36 percent in August. The same month, tariffs kiboshed Ford’s plan to bring the China-built Ford Focus Active to the U.S., depriving American buyers of the only small, car-like vehicle in the automaker’s future product pipeline.

Meanwhile, the company’s struggling European division stands to lose out, and perhaps never get back on its feet, if Trump boosts tariffs on European Union-built vehicles. The president threatened punitive tariffs on Europe-sourced vehicles in response to an existing 10-percent tariff levied on U.S. cars. While the EU signalled it might be okay with the dropping of all auto tariffs, that olive branch went nowhere.

“What we’re urging our administration to do — where we’re in China and in Europe — we say, you need to come to agreement quickly,” Hackett told Bloomberg.

Besides negatively impacting Ford’s profit (analysts predict a 29 percent slump for 2018), the trade dispute certainly hasn’t given investors newfound confidence in the company. Hackett’s taken a lot of heat for the company’s stubbornly depressed stock price, and Moody’s decision last month to downgrade it to near junk status didn’t help one bit. August was a bad month for Ford, and the hurt might be far from over.

[Image: Ford Motor Company]