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.
Comments
It doesn’t seem like GM is worried about this at all. Reuss said it himself they have plans in place if it happens. And if they procure 90% of steel from US already there is nothing to stop them from doing the same for the remaining 10%.
Ford is probably in similar situation.
I like the idea of putting tariffs on products coming in. Every other country out there does it for themselves to protect their home production. It’s the right thing to do.
“there is nothing to stop them from doing the same for the remaining 10%” — yeah, but at higher prices.
Protecting the local industry by imposing tariffs on imported products, steel in this case, means protecting this industry from the more competitive ones in other countries, and allowing the local industry to charge higher prices more in tune with their production costs, which obviously had not been competitive.
So Trump’s protectionist move will cause higher prices for steel on the US market than on the world market, turning the USA into a high prices steel market, making producing automobiles more expensively in the USA, unless one imports the steel not as raw steel rolls or bars, but as stamped or pressed automobile body parts. Or assembles the cars right away completely in countries with lower steel prices.
Goldman Sachs is the biggest crook. For why is he just talking about Ford and GM? Second Goldman has Tesla with a higher market cap higher then GM or Ford. A company that lost over $3 a share last quarter. He also manipulates oil prices. We need Fair Trade not one sided Free Trade. And of course all the networks picked up the Goldman story.
I don’t believe much coming from ” GOLD “man Sachs . They are one of just a few that caused the Great Recession and we as taxpayers bailed these guys out and they are now flush in cash again .
Didn’t the Trump Administration just give Corporations a huge tax break / relief ? So the automakers won’t make as much money as they had projected for this calendar year , not true . That cost will be pushed on the consumer , the average price of a new vehicle is said to be just shy of $35,000.– and some have already said that it would raise the price of that new vehicle $185.00 . Trickle down economics , didn’t work in the 80’s and won’t work now .
I do however think the tarriffs should be more targeted , not to Canada or even Mexico but China who dumps steel on the world market . We have a $350 Billion trade deficit with them , that isn’t fair trade .
NAFTA should be renegotiated , but not a war .
We don’t even know for sure if this will happen , the top Republicans are against it and it still needs to be voted on unless Congress goes on it’s own to stop Trump from doing this .
https://www.yahoo.com/news/paul-ryan-comes-trump-tariffs-172903466.html
from the article ….
Article I, Section 8 of the Constitution gives Congress the power to “regulate Commerce with foreign Nations” and “to lay and collect Taxes, Duties, Imposts and Excises.” But in practice, lawmakers have granted the president broad powers to manage trade.
Regarding Trump’s threat of punitive tariffs on cars imported from Europe, there is this info on numbers in a recent
From “German automakers warn of ‘only losers’ in Trump’s trade talk”
http://europe.autonews.com/article/20180305/ANE/180309659/german-automakers-warn-of-only-losers-in-trumps-trade-talk
VDA = Verband der Deutschen Automobilindustrie, i.e. the association of German automobile industry (including parts manufacturers etc).
More US competition for US-made steel and aluminum seems like it would drive up prices for a number of industries.
Separately, the US already imposes a tariff on a strange assortment of over 12,000 imports – car parts, asparagus, canned tuna, wool clothing … most countries have similar protections, so perhaps ‘free trade’ isn’t so free after all …
Tariffs on imported steel = higher prices for US steel. GM is painting a pretty picture publically and privately their hired guns on the hill are working their asses off to stop this.
Republicans have always been free trade. How quickly they have thrown away common sense.