Tariffs on steel, aluminum likely mean higher costs for auto industry

President Donald Trump signed executive orders placing 25% tariffs on all steel and aluminum imports into the U.S. on Monday. The moves could make imported steel and aluminum more expensive for automakers and parts suppliers, creating additional challenges for a sector already dealing with a soft sales environment, experts say. 

“It’s another hit to the industry,” Jay Cushing, senior bond analyst with Gimme Credit, said in an email to Automotive Dive on Tuesday.

A typical car contains about 1,000 pounds of steel with an estimated cost of between $6,000 and $7,000 per vehicle, Cushing said. A 25% tariff on steel could raise the cost of individual vehicles by as much as $1,500. 

Stephanie Brinley, associate director of Auto Intelligence at S&P Global Mobility, agreed that more expensive raw materials will raise vehicle production costs. 

“If the tariff is applied it will increase the cost of building a vehicle,” Brinley said. “Steel and aluminum are both heavily used in vehicle manufacturing, so it’s going to have an impact.” 

But the impacts of tariffs will vary by company. For example, Ford Motor Co. may not feel a direct effect of higher duties on imported steel and aluminum, CFO Sherry House said Tuesday at the Wolfe Research Auto, Auto Tech and Semiconductor Conference. She said 90% of steel used by Ford comes from domestic sources, with 10% coming from Canada and none from Mexico, adding aluminum is “not that competitive for us.” 

However, that doesn’t mean the automaker will avoid any tariff impacts altogether. 

“The reality is, though, our suppliers have international sources for aluminum, steel,” CEO Jim Farley said Tuesday. “So that price will come through and it may be a speculative part in the market where price would come up because the tariffs are even rumored.”

The latest action by the Trump administration on steel and aluminum imports has also raised concerns for the…