Trump’s Steel Tariffs Squeeze Automakers, Stocks Tumble

⁢ ⁣ Updated June 03, 2025
‌ ‍

Ford and General Motors stocks are falling after President Trump increased tariffs on steel and aluminum⁤ to ⁣50%. Teh tariffs, set to take effect, are expected to raise prices ‌and increase input costs for U.S.‌ automakers. Steel stocks,conversely,are surging.

The announcement followed Trump’s⁣ visit to ​a U.S.Steel Corporation facility in⁢ Pennsylvania, after⁤ approving its acquisition by⁢ Nippon Steel. The move could ‍escalate trade tensions, particularly with the European Union.

The EU has⁤ vowed to retaliate. A spokesperson said that if a mutually acceptable‍ solution isn’t reached,existing and additional EU measures will take effect on ‍July ‌14,or earlier if needed.

Tariff uncertainty has persisted since Trump took office. While a judge had previously ruled against Trump’s​ “reciprocal tariffs,” the trade war may now intensify. A U.S. Court of appeals temporarily paused‍ the lower-court ruling that blocked those tariffs.

Higher Steel Prices⁣ impact Automakers

Automakers⁢ were already dealing with tariffs on car imports and parts. The increased⁤ steel and aluminum tariffs add further pressure. U.S. steel prices are already high, and the tariffs⁣ could encourage domestic ‍companies to raise them further, increasing car manufacturing costs in the⁣ U.S.

Josh Spoores, head of steel Americas analysis at CRU, told CNBC that the move was⁢ a​ surprise, noting that U.S.steel prices are already higher than elsewhere and the country needs imports. He⁣ added that the tariffs will only raise prices.

While automakers haven’t yet ‍issued‌ profit warnings,Ford projected ⁢a $1 billion hit between ⁣2018 and 2019 from earlier steel and aluminum​ tariffs. Those tariffs were 25% on steel and 10% on​ aluminum, compared to the current 50% on both.

Automakers Revise ⁤Guidance

Amid ⁤the tariff uncertainty,some automakers are lowering or suspending ‍their financial guidance.

GM ‍held back its 2025 guidance during its Q1 earnings release. it later ⁣warned of a ‍$4 billion to $5 billion hit from the⁤ tariffs, lowering⁢ its adjusted pre-tax earnings guidance to $10 billion to $12.5 billion, down from $13.7⁢ billion to $15.7 billion.​ The adjusted automotive free cash flow was⁣ also cut to $7.5 billion to $10 ​billion, compared ⁣to the previous $11 billion to $13 billion.

CEO ⁣Mary Barra ⁢said GM has increased its direct purchases in ⁣the U.S. for North ⁤American production⁣ by 27% since⁤ 2019, and over 80% of the content in its U.S.-assembled vehicles is‌ USMCA compliant.

ford withdrew its 2025 guidance due to tariff uncertainty. ⁣The company said it was on track to meet its original adjusted‌ pre-tax earnings guidance of $7 billion to $8.5 billion⁣ if not for the tariffs.

Stellantis has also suspended its guidance, citing tariff uncertainty​ and company-specific‍ issues,⁤ including⁣ a CEO change. Antonio filosa was recently appointed as the new CEO.

trade War Escalation?

The steel tariffs⁤ add to the uncertainty​ for U.S. manufacturing. Treasury⁤ Secretary Scott Bessent ⁢said U.S.-China​ trade talks are ⁢”a⁤ bit stalled” and⁢ require intervention from top leaders.⁣ He expressed confidence that China would ⁤negotiate when President Trump⁣ makes his preferences known.

President Trump stated⁤ on truth Social that his tariffs⁢ hurt the Chinese economy. He claimed the tariffs made it “virtually ⁢impossible for⁢ China to TRADE into the United states marketplace.”

JPMorgan Chase‍ CEO Jamie Dimon, however, dismissed ​the‍ idea that ​China would yield to ​President Trump’s tariffs, saying, “Thay’re not ​scared, folks. This⁤ notion that they’re going​ to come‌ bow to America,I wouldn’t count on that.”

What’s next

The‌ immediate future hinges ⁣on how⁢ the EU responds and whether the U.S.and China can resume⁢ productive trade talks.The automotive industry will be closely​ watching for⁣ any further revisions to financial⁢ outlooks ​as the⁤ full impact of ⁢the tariffs becomes clearer.