Ford, other American businesses suffer under steel tariffs

St. Louis, MO - Multinational automaker Ford Motor Company is criticizing the Trump administration for its steel tariffs. According to the St. Louis Post Dispatch, Ford has escalated its criticism of the Trump Administration's recent steel tariffs after the company suffered a $1 billion drop in profits. "U.S. steel costs are more than anywhere else in the world," said Joe Hinrichs, the president of global operations at Ford. "[We] need to have competitive costs in our market in order to compete around the world."

In September, Ford chief executive officer Jim Hackett called on the Trump administration to resolve the trade disputes to keep the automaker from suffering from additional financial losses. Hackett says that Ford suffered from a $1 billion hit to its revenue despite sourcing many materials from the U.S., which is one of the top steel-producing industries in the world.

Since the Trump administration implemented tariffs on steel imports, domestic hot-rolled coil has gained 28 percent. The price has increased to $920 per metric ton, the highest price in the last 10 years. If the increase in international steel prices due to the U.S. tariffs have had such a major impact on Ford who uses many U.S. materials for its vehicles, there's a chance the tariffs could drastically impact other U.S. companies, too.

For instance, more than 73 million vehicles were produced around the world in 2017 and just under 41,000 ATVs were sold in the U.S. between January and March 2017.

Both industries involve motor vehicles and rely on metals for the development, production, and sales of their products. The impact on these industries could also have a domino effect on other businesses. For instance, in 2017 alone, transportation equipment across the globe consumed $4 billion worth of metalworking fluids.

If there are fewer pieces of transportation equipment due to their high costs, other markets such as the metalworking fluid market could suffer, too. Based on what's happening in Canada, the increased prices of foreign steel could significantly harm American businesses from many different industries. Canada recently embraced similar protectionist measures to boost their country's domestic steelmakers. Lawmakers intend to implement a 25% surtax on foreign imports of seven kinds of steel.

"It is going to kill businesses," said trade lawyer Cyndee Todgham Cherniak. "Exactly what we said shouldn't be done to us, we've done to other countries. And, quick frankly, to our own businesses." Yet, despite the harmful effects on American businesses, U.S. steel producers are not only raking in profits but are also managing to avoid the tariffs they don't want.

According to the Wall Street Journal, steel producers petitioned the U.S. Trade Representative in September for relief from 132 tariff lines. These tariff lines included raw materials and chemicals used in the steel-making process that the Steel Manufacturers Association import from China. Remarkably, steel producers were able to be exempt from half these tariff lines.

In contrast, other industry groups have had a lower success rate in petitioning for exemptions respite grounds that the tariffs would hurt their ability to do business. It's because of this supposed preferential treatment toward the steel industry, the Wall Street Journal reports, that many industries have criticized the Trump administration. Over 6,000 letters were submitted requesting exemptions from tariffs. The National Retail Federation asked to be removed from 1,100 tariff lines; the NRF was granted 48 of its requests.

Similarly, the Consumer Technology Association requested to be removed from 400 tariff lines but was only granted 10 requests. In a statement, the NRF said that the final tariff list unfairly punishes American companies. "All decisions on exclusions were made by career staff at USTR," said a spokesperson for the U.S. Trade Representative in a statement. "By far, the sector that received the most exclusions by value was consumer products. We completely reject the notion that favoritism played any role in this process."

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