Tariffs cost Ford $1 billion in profit and hurt sales in China

Luke Sharrett | Bloomberg | Getty Images
An employee works on a Ford Expedition sports utility vehicle on the assembly line at the Ford Kentucky Truck Plant in Louisville, Kentucky.

President Donald Trump's tariffs are hitting Ford's finances hard.

The second-largest U.S. automaker has suffered $1 billion in lost profits from tariffs on metals imported to the United States, said Ford CEO Jim Hackett in an interview with Bloomberg TV on Wednesday.

The U.S. has a 25 percent tariff on steel and a 10 percent tariff on aluminum imported from several countries, an early step in an escalating trade war that threatens to raise prices on goods and deal a blow to firms in a wide range of industries, including autos.

The tariffs come at a time when Ford is trying to improve its financial health, raise its share price and sink money into developing new propulsion technologies, such as electric powertrains, autonomous driving technology, cloud computing technology for transportation and other mobility businesses.

Ford shares were down nearly one percent Wednesday morning.

“From Ford's perspective, the metals tariffs took about $1 billion profit from us,” he added. “The irony is, we source most of that in the U.S. today anyways. So we are in a good place right now, but if it goes on longer there will be more damage.”

The trade war is also creating difficulties for Ford's U.S. factories. Ford exports Lincoln vehicles from a plant in Louisville, Kentucky to China, where Hackett said the brand is popular. China's tit-for-tat 25 percent tariff hike, which raises the total duty to 40 percent on U.S. autos, has raised the price of the Lincoln MKC sport utility vehicle in China.

In July, Ford cut its full-year outlook, citing in part heavy losses in China in the second quarter.

“We have had to move people in that factory to other functions because of that trade problem,” he said.

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Tesla building car carrier trailers amid “delivery logistics hell”

Tesla boss Elon Musk has announced that the company has built its own car transporter trailers amid its difficulty in delivering the Model 3.

Musk previously tweeted that the brand is in “delivery logistics hell” amid complaints of delayed deliveries from customers awaiting their Model 3s, and took to the social media site again to explain that the company was “running into an extreme shortage of car carrier trailers”.

To quell the problem as the end of the third quarter approaches, the company is upgrading its logistics system, including the construction of its own carrier trailers.

@elonmusk Leased a Model S for two years in 2016. Have a day one reservation for a M3 AWD. Placed order at end of June. Still don't have M3 AWD. Lease ends in one week! New customers getting M3 AWD before me? No help from Tesla. I helped keep the lights on at Tesla! Please help? pic.twitter.com/grMvFwJMdm

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