President Trump’s newly announced tariffs on steel and aluminum could go into effect as early as this week, and investment banking firm Goldman Sachs doesn’t foresee a positive outlook for U.S. automakers, according to a CNBC report published on Monday.
The firm calculated that the 25 percent tariff on steel alone could erase $1 billion in profits from both General Motors and Ford.
“If the proposed tariff of 25 percent on imported steel translates into a similar magnitude of increase in steel prices, it would impact each firm by roughly $1 billion, representing 12 percent (Ford) and 7 percent (GM) of their 2017 adjusted operating income, respectively,” David Kostin, chief U.S. equity strategist at Goldman Sachs, said.
GM has thus far largely ignored the consequences that higher steel prices could bring. The automaker released a statement saying it sources 90 percent of its steel from U.S. suppliers. Mark Reuss, GM product and purchasing chief, said the contracts are long-term in nature as well.
It’s unclear how much aluminum Ford sources from foreign countries, but its top-selling vehicle, the F-150, features an all-aluminum body.