Report: New Tariffs Come at Horrible Time for Auto Industry

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March 9, 2018—President Trump’s new tariffs on imported steel and aluminum could not come at a worse time for the auto industry, according to a report from Business Insider.

After seven years of growth, auto sales in the U.S. have reached an inflection point, and rising costs from tariffs could have a negative impact on the industry, according to the report.

“If all this was happening in 2015 it wouldn’t be as concerning because the market was growing like crazy,” says Karl Brauer, publisher of Kelly’s Blue Book in an interview. “But now we’re sort of a whipsaw effect at the end of a 7 year growth spurt.”

In February, US new vehicle sales declined 2.4 percent from the previous month. That's less than the expected 4 percent drop, but continues a trend that began in 2017 when sales peaked after a strong run. The U.S. auto market has grown from 10 million units sold in 2009 to over 17 million in 2016.

As car sales were taking off, steel production in China skyrocketed, creating a global glut that drove down prices worldwide. As this chart shows below, Chinese steel capacity (green) is barely a blip on the radar in 2000, but a majority of the world's production by last year. 

"Tariffs are not good for anybody," Steven Armstrong, head of Ford Motor Co.’s European operations, told Bloomberg Television on Tuesday. "Any form of tariff is going to be bad news for us and lift our costs, and we’re going to pass that through, probably to the consumer."

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