Ford and General Motors experienced notable declines in their stock prices following President Donald Trump’s announcement to double tariffs on steel and aluminum to 50%, effective immediately. This decision, made during a visit to a U.S. Steel Corporation facility in Pennsylvania, is anticipated to increase production costs for American automakers, already struggling under previous tariff measures.
The President’s declarative stance on tariffs comes on the heels of heightened scrutiny surrounding the U.S. trade policy landscape and follows a temporary pause granted to the administration by the U.S. Court of Appeals regarding previously imposed reciprocal tariffs. In this context, industry experts are expressing concerns that the renewed tariff on steel and aluminum not only jeopardizes the existing supply chains but may also escalate tensions in international trade, notably with the European Union.
In response to the new tariffs, steel stocks surged, reflecting investor sentiment that domestic steel producers may benefit from the less competitive global pricing environment. Meanwhile, the tariffs exacerbate challenges for automakers who are already adapting to rising input costs from previous tariffs. U.S. steel prices are currently among the highest globally, and stakeholders suggest that these tariffs could empower domestic companies to further raise prices, thereby complicating financial forecasts for auto manufacturers.
Market analysts, including Josh Spoores, head of steel Americas analysis at CRU, highlight that this shift in policy was unexpected and reinforces a trend of increasing prices at a time when domestic automakers are already contending with high manufacturing costs. Ford, for instance, previously estimated that Trump’s initial steel and aluminum tariffs would hinder profitability to the tune of $1 billion between 2018 and 2019, when a 25% and 10% tariff were levied on steel and aluminum, respectively.
Despite the alarm bells ringing across the manufacturing sector, no automaker has yet issued updated profit warnings resulting from the latest tariffs. Nevertheless, caution prevails as companies navigate uncertain financial forecasts. General Motors, which withheld its 2025 guidance during its recent quarterly earnings call, now anticipates a loss between $4 billion to $5 billion owing to the tariffs, adjusting its pre-tax earnings projections downward significantly from an initial range of $13.7 billion to $15.7 billion to a newly estimated range of $10 billion to $12.5 billion. Ford has similarly withdrawn its guidance for 2025, noting that it was on track to meet its projections for adjusted pre-tax earnings without the burden of tariff pressures.
The impact of increasing tariffs has led to a broader re-evaluation of strategies among automakers. Stellantis, faced with its own set of challenges, has suspended its guidance due to ongoing tariff uncertainties compounded by internal management changes. New CEO Antonio Filosa, appointed following the departure of his predecessor Carlos Tavares, now takes the reins during a pivotal time in which the company must navigate both tariff pressures and operational complexities.
On the international front, the European Union has signaled its intention to retaliate against the U.S. tariffs, with officials indicating that any existing agreements or measures would automatically take effect if a mutually beneficial resolution is not achieved. This includes potential retaliatory tariffs that could further complicate trade relationships. The EU’s commitment to fighting back against the tariffs underscores the broader anxieties regarding the state of transatlantic trade, already strained by prior disputes and differing economic priorities.
Meanwhile, relations between the U.S. and China appear to be stagnating, complicating the landscape for American businesses reliant on stable trade with the world’s second-largest economy. Treasury Secretary Scott Bessent noted that trade talks have reached an impasse, requiring high-level interventions to break the deadlock. The perception that the pressure from tariffs might coerce China to capitulate has been dismissed by industry leaders, with JPMorgan Chase CEO Jamie Dimon expressing skepticism about China yielding to U.S. pressure.
President Trump has attributed economic distress in China to the tariffs he implemented, framing them as a strategic move that has severely impacted Chinese trade, leading to factory closures and civil unrest. However, some economists and policymakers warn against underestimating China’s resilience and capacity to adapt to economic shifts induced by U.S. policies.
As the machinations of tariffs, corporate strategies, and international relations continue to unfold, American manufacturers are left grappling with an evolving landscape fraught with uncertainty. The implications of these tariffs extend beyond immediate financial assessments, potentially reshaping the competitive dynamics in the automotive and steel industries while influencing broader trade relations that could have far-reaching consequences for the U.S. economy and global market stability.