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Automaker shares fall sharply after being hit by Trump tariffs

When the announcement was made on Wednesday, Fiat Chrysler stocks fell 12 percent and GM stocks dropped 4.6 percent. CNN Money reports that GM cited rising commodity prices.

Ford Motor Company shares fell nearly 5 percent in after-hours trading to a new 52-week low of just above $10 a share. Ford’s commodity costs soared by about $300 million this quarter, with at least half being blamed on tariffs on steel and aluminum. Ford’s Chief Financial Officer Bob Shanks told CNBC the tariffs are expected to eat up about $600 million in profit this year

Steel and aluminum prices have gone up since the Trump administration’s tariffs on the metals went into effect. This includes domestic steel and aluminum, which are more expensive without the threat of lower-priced imports.

Automakers usually have prices for commodities locked in by contracts, and as Richard Palmer, the chief financial officer of Fiat Chrysler said, the company is already seeing some higher prices and is wary about prices later after existing contracts expire.

“I’m not overly concerned today,” he told investors on a conference call, “but we do need to keep an eye on commodity prices as we move into the first part of 2019.”

Fiat also cited changes to Chinese import tariffs as stifling demand. In May, China cut its import duties from 25 percent to 15 percent in an effort to fend off further action by Trump, leading to a slowdown among Chinese car buyers in anticipation of price cuts, according to the Financial Times.

Ford cited lower sales in Europe and Asia and a fire at a North American supplier as having a detrimental impact on both earnings and profits this quarter.

What does this all mean? Analysts say the threat of further tariffs will more than likely effect full-year forecasts for automakers, even though most of the companies are looking forward to strong U.S. sales which have generally been good. But all the major automakers are paring their profit outlook for the year – all because of those tariffs.

Written By

Karen Graham is Digital Journal's Editor-at-Large for environmental news. Karen's view of what is happening in our world is colored by her love of history and how the past influences events taking place today. Her belief in man's part in the care of the planet and our environment has led her to focus on the need for action in dealing with climate change. It was said by Geoffrey C. Ward, "Journalism is merely history's first draft." Everyone who writes about what is happening today is indeed, writing a small part of our history.

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