Trump's trade war is starting to whack car companies like Ford, Honda, and BMW

  • President Donald Trump's tariffs are starting to weigh on the world's largest automakers.
  • BMW, Ford, and Honda have all issued warnings about the tariffs' impact on their businesses over the last few days.
  • The pain could get worse, as the Trump administration is still mulling tariffs on imported cars.

Evidence is mounting that automakers are taking a hit from President Donald Trump's tariffs, and the car companies say the worst may be yet to come.

Large automakers including Ford, Honda, and BMW say they are all reeling from the effects of the tit-for-tat tariffs between the US and China, as well as Trump's tariffs on all steel and aluminum tariffs coming into the US.

The latest example came from Ford, which announced last week that it would be forced to lay off employees as it cuts costs. Some of the impetus for the layoffs is a restructuring program the company is undertaking, but recent sales woes in China and increased material costs are also driving some of the automaker's pain.

Ford CEO Jim Hackett told an audience at a Bloomberg conference that the steel and aluminum tariffs will cost the company $1 billion in 2018 and 2019.

"From Ford’s perspective the metals tariffs took about $1 billion in profit from us," Hackett said. "The irony of which is we source most of that in the US today anyway. If it goes on any longer, it will do more damage."

Sales of Ford cars in China have also tanked in 2018 — the company reported a 43% decline for the month of September compared to the same month in 2017, as well as a 30% fall during the first nine months of the year compared to the same time period in 2017. 

RELATED: Check out the rest of the products directly hit by Trump's trade war: 

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Products directly hit by Trump's tariffs on Chinese goods
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Products directly hit by Trump's tariffs on Chinese goods
Meat: pork; beef intestine; rabbit meat; venison; frog legs
Fish and seafood:live fish including ornamental fish, trout, eels, tuna, and carp; chilled or frozen meat of various types of trout, salmon, halibut, plaice, sole, albacore, tuna, herring, mackerel, cobia, swordfish, pollack, whiting, catfish, rays, and more; various types of salted or smoked fish; other seafood including various types of lobsters, crabs, shrimps, prawns, oysters, scallops, mussels, clams, squid, octopus, conchs, abalone, sea cucumbers, and sea urchins.
Non-meat animal products such as eggs and dairy:Whey products; butter; various types of eggs including chicken; honey; hair of animals including human, hog, horse and badger; animal intestines, bladders; feathers; bones including shells, beaks, corals, hooves, antlers, and more.
Vegetables:onions; garlic; cauliflower and broccoli; cabbage; carrots; turnips; radishes; beats; cucumbers; peas of various types; beans; lentils; celery; mushrooms; peppers of various types; squash; okra; sweet corn; potatoes; sweet potatoes and yams; some types of tomatoes; spinach; Brussels sprouts.
Fruit and Nuts: Coconuts; cashews; almonds; hazelnuts; walnuts; chestnuts; pistachios; macadamia nuts; pecans; dates; figs; pineapples; guavas; oranges; mandarins; clementines; raisins; grapes; apples; pears; quinces; peaches; berries including strawberries, raspberries, cranberries, blueberries and others; bananas; a variety of dried fruits; peels of various fruits.
Cereals: wheat, including durum wheat; barley; oats; corn; various types of rice; grain sorghum; buckwheat; quinoa; and more.
Mill products: flours including those form wheat, corn, buckwheat, rice, rye, other cereals, potatoes, and bananas; groats and meal of various types including wheat, corn, oats, and rice; malt; starches of wheat, corn, potato, and more
Oil seeds: soybeans; seeds of sunflower, flax seed, sesame, mustard, poppy and more; planting seeds for certain crops; cocoas and mint leaves; and seaweeds.
Sugars and candies: cane sugar; candies with no cocoa
Breads and Pasta: uncooked pasta; various breads, pastries, cakes, and biscuits.
Prepared vegetables and fruits: various vegetables and fruits previously listen in their prepared or preserved forms; various fruit jams including strawberry, pineapple, apricot, and more; peanut butter; various fruit juices including orange, pineapple, lime, grape, apple, and more.
Other food items: soy sauce; condiments and seasonings; protein concentrates.
Beverages and vinegars: water, including mineral water; fruit or vegetable juices and juice mixes; beer from malt; wine, including rice wine; ethyl alcohol; vinegars
Food processing waste and animal feed: brans from processing; oil cakes; dog or cat food; animal feed
Tobacco products: various types and preparations of tobacco; tobacco refuse; cigars; cigarettes; smoking tobacco
Salts and minerals: salt/sodium chloride; sulfur; graphite; quartz; types of clays; chalk; slate; marble; granite; sandstone; dolomite; gypsum; some plasters; some types of cement; mica; Epsom salts
Ores, slag, and ash: ores of iron, copper, nickel, cobalt, aluminum, lead, zinc, tin, chromium, tungsten, uranium, titanium, silver, other precious metals, and others; slag, various types of ash.
Mineral fuels and oils: coal; lignite; peat; coke; tars; various types of light oil; various types of kerosene; petroleum oils; liquefied fuels including natural gas, propane, butane, ethylene, and petroleum; oil shale and tar sands
Inorganic Chemicals: chemicals such as chlorine, sulfur; carbon, nitrogen, oxygen, and silicon; acids including sulfuric, nitric, and more; various types of fluorides, chlorides, sulfates, nitrates, carbonates, and more.
Organic chemicals
Fertilizers: animal or vegetable fertilizers; urea; ammonium sulfate; sodium nitrate; and more.
Tanning and drying extracts, dyes, and paints
Essential oils, perfumes: perfume; lip or eye make up preparations; manicure or pedicure products; shampoo; hairspray; bath salts.
Soaps and cleaning products: various types of soap; leather and textile treatments; polishes for shoes and furniture.
Glues, adhesives, and enzymes
Cigarette lighter fluid
Photographic goods: various types of photo plates; instant film; various types of film in rolls; various types of motion picture film.
Various chemical products: pesticides; herbicides; fungicides
Plastics: vinyl flooring and other plastic floor and wall coverings; sausage casings; bags; gloves including baseball gloves; rain jackets; machinery belts.
Rubber: latex; rods, tubes, and other products; conveyor belts; various types of transmission belts; various types of pneumatic tires; gloves; gaskets; dock fenders.
Raw hides and leather: animal skins including cow, buffalo, sheep, goats, reptile; various types of leather made from cow, buffalo, sheep, goats, reptile; leather trunks and suitcases; leather handbags; CD cases; gloves including ski, ice hockey, and typical use; belts; fur clothing, incluidng artificial fur.
Wood: fuel wood; charcoal; various types of wood including oak, beech, maple, ash and cherry; moldings; rods; particleboard; various types of plywood; doors; corks and stoppers; wicker and bamboo baskets.
Wood pulp products
Paper: Newsprint; writing paper; vegetable parchment; carbon paper; self-adhesive paper; cigarette paper; envelopes; tablecloths; handkerchiefs; folders.
Silk
Wool or animal hair products: cashmere; yarns; tapestries and upholstery.
Cotton: fibers; thread; yarn; denim; satin.
Flax: yarn; fabrics
Man-made textiles: polypropylene; rayon; nylon; polyester
Other textile products, rope, twine: hammocks; fish nets; carpets;
Fabrics: corduroy; gauze; terry towel; lace; badges; embroidery
Headgear: caps; hairnets; wool hats; head bands
Stone, plaster, cement, asbestos: stone for art; marble slabs; roofing slate; millstones; sandpaper; floor or wall tiles; cement bricks.
Ceramics: fire bricks; pipes; tiles; porcelain and china.
Glass and glassware: balls; rods; drawn or blown glass; float glass; tempered safety glass; mirrors; carboys, bottles, jars, pots, flasks, and other containers; microscope slides; woven fiberglass
Precious stones and pearls: industrial diamonds; silver and products made of silver; gold and products made of gold; platinum; palladium.
Iron and steel and products derived from the metals:drums; tubes; pipes; doors; windows; screws; horseshoes;
Copper: plates; cables; tubes; pipes; springs
Nickel: bars; rods; wires
Aluminum:powder; cable; wire; screws.
Various metal products, tools, cutlery: industrial items made from lead, zinc, tin, and more; saw blades; bolt cutters; hammers; wrenches; crow bars.
Machinery, both industrial and retail: steam turbines; engines; fuel-injection pumps; air compressors; air conditioning machines; refrigerators; cream separators; hydraulic jacks; escalators; manure spreaders; copiers; automatic beverage-vending machines
Electronics: vacuum cleaners; hair clippers; spark plugs; generators; bicycle lights; electric amps; television cameras; various types of TVs; video projectors.
Vehicles and parts: axles; driving shafts; gear boxes; radiators.
Parachutes

Ships and boats: sailboats; motorboats; canoes; yachts.

Instruments for scientific or medical purposes: microscopes; cameras for non-art purposes; gauges for pressure, electrical currents, and more.
Clocks and watches
Furniture, bedding, mattresses: car seats; wood chairs; furniture designed for offices, kitchens, and more; mattresses; chandeliers; lamps.

Assorted items: buttons; stamps; paintings; collections of zoological, botanical, mineralogical, anatomical, historical, archaeological interest; antiques of an age exceeding one hundred years

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BMW is facing similar problems

BMW, which produces its X3 and X5 SUVs at a plant in Greer, South Carolina, is dealing with similar Chinese sales woes because of the trade war.

The South Carolina-made BMW models are hugely popular in China but are also now subject to retaliatory tariffs from the Chinese government that came in response to Trump's duties on $250 billion worth of Chinese goods.

It appears the tariffs are slowing down BMW's exports, according to the Charleston Post and Courier.  Auto exports from the Port of Charleston dived roughly 35% in August compared to the same month in 2017, according to the Post and Courier. And auto exports are down over 30% from the port in the first two months of the trade war kicking off in earnest.

Much of the auto exports from South Carolina are the BMWs and $2.4 billion of the $6.3 billion shipped from Charleston to China in 2017 were BMWs.

"The continuing international trade conflicts are aggravating the market situation and feeding uncertainty," BMW told The Post and Courier.

Other factors contributed to the decrease, such as BMW's shift to a new generation of its X5 — one of the most popular models from the South Carolina plant —  but the company said the tariffs were a significant reason for the slowdown in sales to China.

'Hundreds of millions of dollars in new, unplanned cost'

Rick Schostek, executive vice president for Honda North America, expressed similar concerns about the steel tariffs during a Senate Finance Committee hearing in late September.

"So, while we’re paying relatively little in the way of tariffs on steel, the price of domestic steel has increased as a result of the tariff, saddling us with hundreds of millions of dollars in new, unplanned cost," Schostek said.

In both cases, the increased costs are due to the tariffs but also their second-order effects. Schostek told the committee that 90% of Honda's steel used in US cars is domestic. But as the tariffs have pushed up prices for imported steel, domestic steel producers have increased their prices.

In the background of these losses is the looming threat of an even bigger hit to automakers. The Trump administration is researching the possibility of imposing tariffs on imported autos and auto parts, a move almost every single automaker has warned would wreck the industry.

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