Ford CEO says Trump metals tariffs took $1B of profit
Ford Motor Co. Chief Executive Officer Jim Hackett encouraged President Donald Trump’s administration to resolve trade disputes quickly or it could do “more damage” to his company, which is already suffering losses from tariffs imposed by the White House.
“The metals tariffs took about $1 billion in profit from us – and the irony is we source most of that in the U.S. today anyways,” Hackett said in an interview on Bloomberg Television. “If it goes on longer, there will be more damage.”
A deal is imminent on a new North American Free Trade Agreement, Hackett said later during the Bloomberg Global Business Forum 2018.
“I think there’s going to be news about NAFTA being closed soon,” Hackett said. “Europe and North America are making tremendous progress as it relates to vehicle discussions and now we have to deal with China.”
Ford and other global automakers have opposed the president’s use of tariffs and the retaliation they spur. Last month, Jim Farley, Ford’s president of global markets, described Trump’s tariffs on steel and aluminum as a “significant headwind for us.” A few weeks later, the second-largest U.S. automaker canceled plans to import the Focus Active crossover from China, citing Trump’s vehicle tariffs.
“What we’re urging our administration to do – where we’re in China and in Europe – we say, you need to come to agreement quickly,” said Hackett, who added that trade issues are “top of mind” for him.
Hackett said the trade disputes are paralyzing American business.
“Business, you hear them talk about, they count on certainty,” Hackett said. “In this case, we’re kind of frozen. A lot of businesses aren’t sure and that’s not good.”
New restrictions on trade, such as Trump’s threat to impose tariffs on vehicles coming into the U.S., exacerbate the problem of global overcapacity to manufacture cars, Hackett said.
“There’s too much capacity maybe in the wrong places and that’s why the trade question is so important,” he said. “The footprint for production was more malleable before these trade structures. Now we’re going to have to deal with lanes that we can only distribute in.”
Ford reported net income in 2017 of $7.6 billion, the most since 2013, but with analysts estimating a 29 percent drop in profit this year, it’s embarked on an $11 billion restructuring effort to improve margins in the core automotive business while investing billions in electric and autonomous-vehicle technology.
Ford stock fell 1.3 percent in trading Wednesday to $9.27.