Skip to navigationSkip to content
American flags fly at GM's headquarters in Detroit
Reuters/Mark Blinch
Counting the cost of “America First.”
#MAGA

Carmakers are counting the cost of Trump’s “greatest” tariffs—in billions of dollars

By Eshe Nelson

Donald Trump’s “America First” policies on trade have spooked investors in some of America’s most prominent manufacturers: the “Big Three” carmakers of GM, Ford, and Chrysler.

GM, the US’s largest carmaker, said today that higher commodity costs (primarily steel and aluminum) would cut deeply into its margins, and so the company lowered its earnings outlook for the rest of the year. Earlier this year, Trump imposed tariffs on imports of steel and aluminum from China, the European Union, Mexico, and Canada to protect the US steel industry from competition on “national security” grounds. Companies that rely on these metals—imported or not—are feeling the pain. For example, GM gets most of its metal from domestic producers, but US steel prices have risen amid the tariffs.

At the time of writing, GM’s shares were down by around 7%, the third-worst intraday decline for the company since it relisted in 2010 following bankruptcy. GM said that higher commodity costs took a $300 million chunk out of its earnings (paywall) for the second quarter and that it expects the elevated costs to persist.

Fiat Chrysler, meanwhile, said earlier today that it was also cutting its 2018 outlook because of a slump in demand in China. The news came shortly after the announcement that the company’s former chief executive Sergio Marchionne died suddenly following complications from surgery. Though Fiat Chrysler has its own challenges to deal with, including how to boost the Jeep brand in China, it’s also being dragged down by wider concerns about what will happen to the auto industry as Trump threatens more tariffs. The company’s shares fell 16% on the day, the second-worst daily drop since 2009.

Ford, which will report its latest quarterly earnings after the market closes today, was down by 4% at the time of writing, amid all the bad omens for automakers. Between GM, Ford, and Fiat Chrysler, $10 billion in market value had been erased at the time of writing.

There could be more bumps in the road ahead. Trump has threatened a 25% tariff on imports of cars and auto parts, against the guidance of his own advisors. The president recently suggested that market gains since his election give him leeway to be aggressive on tariffs. More days like today for iconic American companies may test his resolve. Or not: