The burgeoning U.S. trade war has been a meandering journey that has provided more questions than clarity in recent months.
After a few weeks, the earth-shattering 145% reciprocal tariffs on China were reduced. A deal with the UK was announced, but hasn't been made official. The EU and U.S. were on the brink of an all-out trade war but are now back at the negotiating table.
And now, the courts are fighting over whether President Trump has the authority to issue these tariffs in the first place.
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The U.S. Court of International Trade ruled 3-0 that President Donald Trump's Liberation Day tariffs exceeded the authorities granted him under the Constitution, but an appeals court reversed that decision, leaving the reciprocal tariffs in place.
Section 232 of the Trade Expansion Act of 1962 gives the president the authority to tax the imports of products deemed to threaten or impair the national security of the U.S.
Since Trump invoked 25% automotive tariffs under Section 232, they have not been challenged in court and have been in place since they took effect on April 3. The 25% tariffs on auto parts took effect a month later, on May 3.
The tariffs, while aimed at foreign automakers, have had a universally negative impact on the Big 3 domestic automakers.
General Motors CEO Mary Barra sticks by President Donald Trump
Ford and Stellantis, among others, have already withdrawn their guidance for the year due to the uncertainty surrounding Trump's tariffs.
General Motors GM says that auto tariffs will wipe out between $4 billion and $5 billion in EBITDA this year.
Despite the hefty pricetag her company due to tariffs, GM CEO Mary Barra defended Trump's tariffs last week during an interview at The Wall Street Journal's Future of Everything event, pointing to the disadvantages U.S. makers face overseas.
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“For decades now, it has not been a level playing field for us automakers globally, with either tariffs or non-tariff trade barriers. So I think tariffs is one tool that the administration can use to level the playing field,” Barra said.
Barra went on to say that her relationship with Trump has improved since his first term, saying, “There was actually some things where General Motors could have handled some situations better.“
During his first term, Trump and GM clashed over numerous issues, including plant closures and moving jobs overseas. However, GM is one of the federal government's biggest partners, with hundreds of millions of dollars in contracts to supply the executive branch and military with vehicles.
So it's best practice for both sides to work together, and Barra isn't the only auto executive praising Trump for his handling of the industry this time around.
Image source: Shutterstock
Ford CEO Jim Farley praises Trump's tariffs
GM isn't the only company facing a billion-dollar charge from U.S. tariffs.
Ford revealed that the tariffs will shave at least $1.5 billion off the company's EBITDA this year, but CEO Jim Farley also praised Trump's handling of tariffs.
Ford says it “supports the administration's goal to strengthen the U.S. economy by growing manufacturing.”
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One reason Ford supports the tariffs is that it already has a much stronger domestic production base than its domestic competitors.
“Last year, we assembled over 300,000 more vehicles in the U.S. than our closest competitor. That includes 100% of all our full-size trucks,” CEO Jim Farley said during the company's last earnings call.
“In this new environment…automakers with the largest U.S. footprint will have a big advantage, and boy, is that true for Ford,” he added. It puts us in the pole position.”
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