Steel & Aluminum Tariffs Could Cost GM $1 Billion – Here’s Why GM Is Keeping Quiet

[Gorehamj]

John Goreham
Contributing Writer, GM-Trucks.com
3-6-2018

 

General Motors could lose up to $1 Billion in profits per year if the 25% tariff on steel and 10% tariff on Aluminum proposed by President Trump actually go into effect. This, according to a report in Market Watch who cites Goldman Sachs as having done the math. Don’t expect GM’s Mary Barra to pull an Elon Musk style hissy fit though. Here’s why. 

 

One very specific tariff has benefited General Motors and its peers in the U.S. automotive industry for over 55 years. The “Chicken Tax” as it is most commonly known, is a U.S. 25% import tariff on light trucks covering nations not included in the North American Free Trade Agreement. The dispute began under President Kennedy, during a trade argument primarily over American chicken with European countries. As a counter to the tax imposed on American food exports, President Johnson instituted the retaliatory tariff which has very effectively blocked the importation of any pickup truck made outside of North America in any significant (or insignificant) number in the modern age.

 

The 25% import tariff on light trucks first initiated during Kennedy’s administration and instituted during Johnson's protecting American automakers’ truck business was kept in place by Nixon, Ford, Carter, Reagan, Bush, Clinton, Bush, Obama, and Trump. Automakers have been pretty careful not to complain about the tariff, since it accounts for a huge volume of jobs in America, Mexico, and Canada. And even more importantly perhaps, huge profits.

[Coby7]

I think Ford would tend to lose more since 46% of aluminum comes from Canada.

[Coby7]

Sorry, I guess that's wrong.  46% of all aluminum imported to the US is from Canada. Ford actually imports 88% of it's aluminum from Canada because of it's quality.

[Coby7]

25% tariff on aluminum is a lot, may be enough to tip the scale.  Ford may have to move their truck plants to Canada.  Now how does that help US jobs?

[Logan Lanfear]

Yeah its hard to not bring politics into something like this.  I hate to see American companies hurting because of tax and having to buy more expensive material.  1 billion would definitely cut into profit and could cause cost cutting elsewhere.  

[reardiff]

Or they pass it along to the consumer and we end up paying even more. 

[lapoolboy]

59 minutes ago, reardiff said:

Or they pass it along to the consumer and we end up paying even more. 

Bingo

[KARNUT]

I wouldn’t mind paying a little more if its means more Americans getting jobs. I’m retired so I don’t need a job, I lived the American dream. I don’t mind paying a little more so someone else can.


Sent from my iPhone using Tapatalk

[sdeeter19555]

I wouldn’t mind paying a little more if its means more Americans getting jobs. I’m retired so I don’t need a job, I lived the American dream. I don’t mind paying a little more so someone else can.


Sent from my iPhone using Tapatalk

I'm not retired and I don't mind paying it forward either...I also try hard to use very local contractors and buy local goods. It all helps in the end...

Sent from my SM-G950U using Tapatalk

[MikeNH]

5 hours ago, Coby7 said:

Sorry, I guess that's wrong.  46% of all aluminum imported to the US is from Canada. Ford actually imports 88% of it's aluminum from Canada because of it's quality.

I doubt there would be a tariff on materials from Canada since it would be covered by NAFTA. This is pretty squarely aimed at China and their practice of dumping goods and materials at sub-market prices into the US. Frankly if it hurts China, I'll gladly pay more for my next truck.

[Likarok]

I really don't think Trump has thought this through very good! 

[Yonah_Mtn]

Every foreign nation protects their workers with high import tariffs and only the US doesn't.. IMO, what would be fair is reciprocal. If another nations levies high tariffs or duties on American products; then, America charges the same on their products. IMO, reciprocal is fair to everyone.  

[Coby7]

But that's not free trade. The whole idea behind North American free trade is free trade.  It was starting to work we should give it time or maybe lock currencies.

[Likarok]

I really feel that this is really aimed at China and Russia! They are the # 1 and 2 producers of both products by billions of tons, but Canada is the #3 in aluminum. (US is #9) With the US defence industry and as pointed out, the auto industry relying on these products it would in the long run end up costing US taxpayers more if they were to tariff a ready supply of aluminum right on the same continent. I think Trump is saying that the renegotiation of NAFTA needs to get done sooner rather than later and he is trying to light a fire under some beaurocratic asses.! But who knows. my 2cents  hahahaha

 

And here is a fact that I just learned. 8 of the top 10 producing iron ore mines in the world are in Australia. Wow! Glad they are on or side! 

 

That that my friends is your steel, aluminum and iron ore lesson for the day!

[MikeNH]

1 hour ago, Likarok said:

I really feel that this is really aimed at China and Russia! They are the # 1 and 2 producers of both products by billions of tons, but Canada is the #3 in aluminum. (US is #9) With the US defence industry and as pointed out, the auto industry relying on these products it would in the long run end up costing US taxpayers more if they were to tariff a ready supply of aluminum right on the same continent. I think Trump is saying that the renegotiation of NAFTA needs to get done sooner rather than later and he is trying to light a fire under some beaurocratic asses.! But who knows. my 2cents  hahahaha

 

And here is a fact that I just learned. 8 of the top 10 producing iron ore mines in the world are in Australia. Wow! Glad they are on or side! 

 

That that my friends is your steel, aluminum and iron ore lesson for the day!

The Chinese own a lot of the mines in Australia.