Trump's Steel Tariffs 'Hits Straight On Ford's Core:' Analyst Sees Higher Input Costs And Eroding Pricing Power For Tesla Rival

Donald Trump‘s tariffs on steel and aluminum are likely to have a deep impact on the input costs of the U.S. automaker Ford Motor Co. F, explains Alex Tsepaev, the chief strategy officer at B2PRIME Group.

What Happened: Unlike globalized automakers like Stellantis NV STLA, Ford remains deeply tied to U.S.-centric manufacturing, Tsepaev told Benzinga, suggesting that “A 50% tariff could inflate COGS significantly just as pricing power erodes in both EV and ICE segments.”

The cost of goods sold, or COGS, refers to the input costs paid by the firm to manufacture its final products.

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Thus, according to Tsepaev, “Trump's call to double steel tariffs hits straight on Ford's core. Steel makes up more than half of the weight of a vehicle, and Ford can't do anything with this reality. In 2018, similar tariffs were estimated to cost Ford over $1 billion annually. When your business runs on metal and tariffs make the metal more expensive, Wall Street notices it.”

Earlier in May, Ford suspended its financial guidance during the first quarter results, which included full-year adjusted EBIT and adjusted free cash flow, due to tariff-related uncertainty. According to Tsepaev, this was due to a 65% decline in profits, with revenues falling to $40 billion.

He forecasts that increased input volatility for Ford could lead to downward revisions.

“In today's environment, policy uncertainty is the new supply chain risk. For investors, Ford looks exposed, rigid, and margin-constrained in all the wrong places,” Tsepaev added.

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Why It Matters: Trump doubled U.S. tariffs on imported steel from 25% to 50% on May 31, which took effect on June 4.

Trump said he initially considered a 40% tariff but raised it after feedback from industry leaders. “At 25% they can sorta get over that fence,” he said, adding, “At 50% nobody’s getting over that fence.”

In 2018, Trump-era tariffs prompted a minor rise in U.S. steel production. However, a 2023 report by the International Trade Commission found that these same tariffs increased costs for downstream industries, leading to a more than $3 billion reduction in output for vehicle, machinery, and tool sectors by 2021, suggesting a net negative economic impact.

Shares of Ford ended 1.58% higher on Friday, and they have risen by 6.32% on a year-to-date basis, but it was down 17.12% over the last year. In premarket on Monday, the stock was up 0.05%.

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