Jim Hackett, CEO of Ford, the second-largest U.S.-based automaker, said Wednesday that Trump’s taxes on imported steel and aluminum will cost Ford $1 billion through 2019.
Likewise, Walmart, America’s largest retailer, has told the administration that Trump’s latest round of taxes — on $200 billion of Chinese imports — could increase prices for its shoppers. Walmart specifically mentioned items ranging from car seats, cribs and backpacks to hats, pet products and bicycles.
Procter & Gamble, the consumer products giant, has warned of both potential price increases and job losses as a result of the tariffs.
In the meantime, drinking Coca-Cola is costing more because of Trump’s tariffs. Macy’s, too, has warned of likely price increases. So has Gap.
On Wednesday, Federal Reserve Chairman Jerome Powell took on the issue at a news conference after the Fed announced its latest interest rate hike. Asked about the Trump tariffs forcing up prices for America’s consumers, Powell agreed that Fed officials are hearing from businesses about forthcoming higher costs.
“You don’t see it yet,” the chairman said, referring to the data the Fed studies.
But, Powell acknowledged, “the tariffs might provide a basis for companies to raise prices in a world where they’ve been very reluctant to and unable to raise prices.”
At his own news conference Wednesday in New York, Trump rejected any notion that his tariffs posed an economic risk, echoing assertions by his administration that consumers would barely notice the new taxes.
“It’s had no impact … on our economy,” the president said after meetings with foreign leaders at the United Nations General Assembly.
Hackett, in a television interview Wednesday, revealed the $1 billion estimate that he said Trump’s steel and aluminum tariffs are costing Ford. He said the figure is a year-over-year increase from March through 2019.
Ford buys most of its metals from U.S. producers, which have raised prices this year as a result of the tariffs on foreign competitors, the company has said.
Hackett’s boss, Executive Chairman Bill Ford, said Thursday the company has met with U.S. Trade Representative Robert Lighthizer to give input on trade policies.
Ford wants decisions to be made because it takes years for the capital-intensive auto industry to develop and build vehicles, he said.
“Our business runs a lot better when we have certainty and we don’t have big gyrations because our lead times are long,” Ford said.
Other automakers that produce vehicles in the U.S. are experiencing the same price increases as Ford, said IHS Markit Senior Analyst Peter Nagle. While they may be absorbing the increased costs at present, eventually they’ll have to pass at least some of the costs on to customers, he said.
“They’re maintaining pricing discipline now just because the consumer can’t support those higher prices,” Nagle said. But if the tariffs stay in place for the remainder of Trump’s term, “obviously some of those costs would have to start being passed along to the consumer here.”
Ford wouldn’t comment specifically on price increases but said it will “continue to make the necessary decisions to remain competitive.”
The Trump administration imposed a 25 percent tariff on imported steel and 10 percent tariff on aluminum from some countries, including China, in March. It added Canada, Mexico and the European Union in June. The administration justified the tariffs by calling foreign steel and aluminum a threat to U.S. national security.
Ahead of the tariffs, U.S. metals producers raised prices as companies tried to buy before the tariffs went into effect, Nagle said. He said steel prices are up 25 percent since the tariffs began, and he expects that to rise to near 30 percent next year.
Automakers would either raise sticker prices or cut discounts on new cars, trucks and SUVs, Nagle said. The administration also is studying 25 percent tariffs on imported vehicles, also based on national security concerns. Those tariffs would raise prices, slow auto sales and could cut U.S. economic growth in half by 2020, Nagle said. Other countries also are likely to retaliate on imports from the U.S.
“You can’t have a trade war without automotive,” he said.
Boak contributed from Washington. AP Economics Writer Paul Wiseman also contributed from Washington.