The CEO of the Ford Motor Company has warned that President Donald Trump’s tariffs threaten to “blow a hole” in the U.S. auto manufacturing industry.
Jim Farley spoke out this week about the 25 percent across-the-board trade tariffs looming for Mexican and Canadian imports to the U.S., including for steel and aluminum, and warned that it could trigger major job losses in Trump-voting states.
Canada is the biggest source of U.S. imported steel, which is key to the American auto industry, and the tariffs importers like Ford will have to pay will significantly hurt American consumer prices and competition with foreign vehicles.
“Let’s be real honest: Long term, a 25 percent tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen,” Farley warned at a conference in New York on Tuesday.
“Frankly, it gives free rein to South Korean, Japanese and European companies that are bringing 1.5 million to 2 million vehicles into the U.S. that wouldn’t be subject to those Mexican and Canadian tariffs. It would be one of the biggest windfalls for those companies ever,” he emphasized.
Farley warned that there’s an ongoing “global street fight” in the auto industry with the transition to electric vehicles and the rapid growth of Chinese automakers across various markets, indicating now is not the time for disruption.
“President Trump has talked a lot about making our U.S. auto industry stronger, bringing more production here, more innovation to the U.S. and if his administration can achieve that … it would be one of the most signature accomplishments,” Farley said. But so far, he warned, the signs are troubling.
Farley also added that if Trump goes ahead with plans to roll back parts of the Inflation Reduction Act (IRA), it would jeopardize jobs at Ford for those working on electric vehicle production. The act provides a federal tax credit of up to $7,500 to consumers who purchase a new electric vehicle.
“We’ve already sunk capital … into battery production and assembly plants all through Ohio, Michigan, Kentucky and Tennessee,” Farley said. “Many of those jobs would be at risk if big parts of the IRA are repealed.”
The CEO said that for all of Trump’s talk about making the American auto industry stronger, “so far what we’re seeing is a lot of costs and a lot of chaos.”
Other experts have echoed Farley’s warning, and not that tariffs on materials coming from outside the U.S. will increase pressure on sourcing them domestically.
“Steel producers have to find ways to increase capacity, and aluminum and steel might be in short supply in the short term,” Sam Fiorani, analyst at AutoForecast Solutions, which studies the industry, told The Associated Press. “Producing vehicles has a lot of moving parts, and raising the price of what is among the most important components of the vehicle is only going to raise the price of an already expensive product.”
The warnings come as Trump announced on Thursday that the U.S. will levy significant import taxes on any country that imposes its own tariffs on American goods, triggering a process that could lead to a destructive global trade war.
