Trump won’t rule out recession as US tariffs begin
President Trump refused to rule out the possibility that his economic policies, including aggressive tariffs, could lead to a recession. In an interview with Fox News, he acknowledged a “period of transition” but insisted that his policies would ultimately benefit the economy.
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- The price of cars will likely increase due to tariffs imposed by President Donald Trump on steel and aluminum imports.
- The auto industry has resisted tariffs, with Ford being particularly vocal in its opposition.
- Experts warn that disrupting the integrated North American auto industry will harm both businesses and consumers.
Detroit automakers are caught in the crosshairs of the trade war President Donald Trump has escalated with tariffs, and car buyers will be the ones to pay for it, experts said.
On Wednesday, Trump imposed sweeping 25% tariffs on all steel and aluminum imported into the United States. The move is intended to level the playing field for domestic manufacturers, but it has sparked tensions and risks a global trade war. The European Union, which is hit with these latest tariffs, retaliated within hours with counter duties put on U.S. goods exports.
Trump’s move came after he reversed his threat made Tuesday to impose 50% tariffs on the steel and aluminum that crosses America from Canada after the province of Ontario said it would charge U.S. customers a tariff for electricity. The president justified his tariff plan — the tax paid by importers on goods when they cross international borders — citing his authority to declare a national emergency over electricity in the affected areas.
The tariffs that remain in place create an unprecedented disruption to the auto industry that will almost certainly result in a price hike, said Sam Fiorani, vice president of global vehicle forecasting at Auto Forecast Solutions.
That’s because the companies that bring the foreign goods into the country pay the tariff to the government, contrary to Trump’s claims that exporting nations pay it. That means the automakers would foot the bill for any steel or aluminum imported to the States.
“The North American auto industry has been working for 30 years in harmonized production and shipment of parts and vehicles across all three countries’ borders,” Fiorani said. “Disrupting the price of those vehicles or parts from Canada and/or Mexico will only increase the price of vehicles and scare consumers away from buying them.”
Fiorani said the rising cost to import steel and aluminum for vehicles will result in automakers offsetting the cost hike by raising prices. Likewise, if the carmakers shift to using more steel and aluminum from domestic producers, those prices will go up because it will cost those producers more to increase their production.
“Everything is set up right now to be the most efficient it can be, and interrupting the price and flow of parts and vehicles can only increase the price,” Fiorani said.
Automakers’ reactions
Speaking for the Detroit Three, Rich Chrismer of the American Automotive Policy Council said in a statement emailed to the Detroit Free Press that Ford, GM and Stellantis purchase the vast majority of their steel and aluminum in the United States or North America.
“We are still reviewing and awaiting all of the details of the tariffs, but revoking the exemption for Canada and Mexico and extending tariffs to auto parts with steel and aluminum will add significant costs for automakers, suppliers and consumers,” the statement read.
Ford has been the most vocal of the Detroit automakers about its appeal to Washington to reconsider tariffs. As the Free Press has reported, Ford Executive Chairman Bill Ford has talked about his phone conversations with Trump about tariffs and how they would hurt the auto industry. Just last month, Bill Ford said the automaker’s leadership was “spending a lot of time making sure that the administration understands the implications for our business.”
Likewise, Ford CEO Jim Farley said he has made a few trips to the nation’s capital to educate legislators on the impact tariffs would have on the industry. He told investors, “Let’s be real honest: Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.”
The industry’s pushback against broad tariffs
Trump has listened to Detroit auto leaders as they have petitioned against broad tariffs on auto imports, but remains insistent on tariffs.
On March 5, Trump put a 30-day pause on tariffs on Canadian and Mexican imports used by domestic automakers under the existing USMCA trade agreement. The pause came after General Motors CEO Mary Barra, Farley and Bill Ford, as well as Stellantis Chair John Elkann asked for the reprieve during a phone call with the president a day earlier. The leaders told the president the tariffs would put them at a competitive disadvantage against rival import automakers.
The existing supply chains of motor vehicle components and vehicles often crisscross the Northern and Southern borders multiple times as some models are produced. Anderson Economic Group in East Lansing had estimated that broad 25% tariffs on all parts and vehicles crossing from Canada and Mexico to the United States, could drive the cost of a new car up by $9,000 or more.
Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at [email protected]. Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.
