Foolish Nature of Picking Winners: Trump's Tariffs Cost Ford $1 Billion


The CEO of Ford says Trump's tariffs on metals cost the company $1 billion. Who won?

According to Ford's CEO, Trump's Tariffs on Metals Costs Ford $1 Billion.

> “From Ford’s perspective the metals tariffs took about $1 billion in profit from us,” CEO James Hackett said at a Bloomberg conference in New York, “The irony of which is we source most of that in the U.S. today anyway. If it goes on any longer, it will do more damage.” He did not specify what period the $1 billion covered.

It's reasonable to assume GM is in a similar boat.

Steelworkers Demand Higher Pay as Tariffs Lift Profits

The Wall Street Journal reports Steelworkers Demand Higher Pay as Tariffs Lift Profits.

The steel workers did not benefit. They have authorized a strike demanding higher wages as the price of steel rose 30%.

> Leaders for some 30,000 members of the United Steelworkers union say United States Steel Corp. and ArcelorMittal SA aren’t passing those benefits to their workers, who have gone without raises in recent years even as wages have started to climb more broadly.

Trump Picking Winners

Given there are vastly more users of steel than producers of steel, Trump's ploy was a piss-poor tradeoff. Any gain to the steel industry is a loss by Ford, GM, and all the other users of steel and aluminum.

Ford ate the cost as did GM, but any ability of the steel producers to hike wages is more than offset by lost profits and less opportunity for manufacturers who use steel to hike wages.

Some small- and medium-sized manufacturers who use steel as an input will undoubtedly go out of business. Consumers will pay more for products.

It is idiotic to see any "win" in this other than for a small number of producers at a huge cost everywhere else.

Mike "Mish" Shedlock

Comments (14)
No. 1-6

We need more cheap steel from China? Aren’t new steel plants opening in the US? why do some people hate the American worker and wants there jobs to be outsourced to another country?


If we're being rational economists more jobs and economic output from companies that utilize steel than produce it. But Trump is politically motivated not economically motivated. Seems clear to me he's looking at his political base and what they're issues are and not what's good for the country as a whole.


indiscriminate use of section 232. can't believe congress has not intervened. with the $800 billion in defense spending we could have opened 5 steel mills.


What makes you think manufacturers who use steel will hike wages instead of increase profits?

Seriously though, I agree Trump is effectively picking winners, but that is what government does in almost every action it takes. Whether it is bailing out the bankers, banning short selling, handing money to defense contractors, exchanging public union contracts for political donations, how it taxes private equity carried interests, allowing mass illegal immigration to hold down wages on low skill jobs, building a road here instead of over there, and on and on. The difference here is that the "winners" Trump is picking haven't been picked in a very long time. Too much government for too long, in too many areas of our lives, is why we are getting this backlash and a new set of "winners."



Think about it as accelerating the increase of the fuel economy of vehicles.

I thought you wanted to protect the environment? What gives?

The Center for Automotive Research (CAR), in a recent 2017 report, estimated that the increased use of high strength steels (HSS) is expected to peak at around 15 % of total vehicle weight composition by 2020, before gradually falling to roughly 5 % by 2040 as other lightweight materials gain ground. At the same time, mild steel content will fall from historic highs of 55 % of vehicle weight to about 5 %. In terms of lighter materials, UHSS steel and aluminium use will grow steadily, especially in safety-cage parts and components (e.g. frames and rails). The use of third generation steels with better formability properties will grow significantly. Use of magnesium will also grow, particularly in applications such as instrument panel crossbeams. The use of carbon fibre reinforced polymer (CFRP) will grow slowly with most applications in reinforcements rather than panels. CAR predicts that by 2030, 96 % of vehicle programs will consider aluminium for body-in-white applications.


Ford has every incentive to exaggerate their losses from the tariffs. We import maybe 5% of our steel from China and there are always ways to work around tariffs. Instead of going directly from China, go to Canada and then Canada to the US. Etc... .

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