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- Ford said President Donald Trump’s new tariffs were at least partially responsible for costs increasing by $480 million in the first quarter of 2018.
- Despite the unplanned costs, the company still posted earnings that beat analysts expectations.
- Follow Ford’s stock price in real-time here.
President Donald Trump’s recently imposed tariffs on imported steel and aluminum were at least partially responsible for Ford’s costs going up by nearly half a billion dollars during its first quarter, the company said Wednesday.
“Automotive’s lower earnings-before-interest-and-taxes (EBIT) was caused by commodity cost increases of about $480 million, along with adverse exchange effects of about $240 million,” Robert Shanks, Ford’s chief financial officer, said on the company’s first quarter earnings call Wednesday. “The increase in commodity cost was largely metals-driven, in part by the market’s reaction to potential increases in U.S. tariffs.”
Outside of the ballooning cost of raw materials, Ford’s expenses were relatively flat, the company said, helping fuel its adjusted earnings of $0.43 per share on revenue of $39 billion – both more than analysts had expected.
Back in 2014, Ford rolled out a big change in its F-150 pickup truck, one of its best-selling models of the flagship truck line, shifting to an aluminum body instead of steel one in a bid to increase fuel efficiency. That shift has yet to pay off as aluminum prices have spiked.
Last year, the company’s income in North America fell by 17% thanks to rising commodity prices, and that was before Trump’s tariffs were announced.
Now, Ford’s doubled down on truck sales while killing off sedans. In its earning announcement Wednesday, the automaker announced it would shrink its passenger car offering in North America to two models: the famous Mustang and a new Focus Active crossover SUV.
“We’re not going to be victims in this kind of thing,” CEO Jim Hackett said on the call in response to an analysts question. “Like everyone, we’re dealing with the sudden news, and I think we’ve done a great job internally of dealing with that.”