Trump’s Steel Tariffs Squeeze Automakers, Stocks Tumble

⁢ ⁣ Updated June 03, 2025
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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.