Detroit automakers already feeling pinch from President Trump's plan to impose tariffs

Trump says Europe and U.S. working toward zero tariffs

DETROIT – Automakers in Detroit are already feeling the pinch from President Donald Trump's plan to impose tariffs.

Fiat Chrysler's shares lost nearly 12 percent Wednesday, and General Motors' stock took a nearly 5 percent hit. The FCA drop was impacted by management changes, but Trump's tariffs played a role in both.

Trump announced Wednesday afternoon that Europe and the United States are working toward zero tariffs.

FCA is worried about its China business, and the tariffs aren't helping there. General Motors warned Wednesday that it's expecting $1 billion is losses in the next year, which is double the original estimate.

Cars and trucks are built with steel and aluminum, and suppliers provide parts and modules using those expensive commodities. Now, they're getting prohibitively more expensive, leading many, such as LMC auto analyst Mike Schuster, to call Trump's tariffs a disaster.

"The uncertainty the tariffs are causing is bad," Schuster said. "The tariffs themselves are far worse, certainly, for the industry and the economy overall."

He said he's watching the industry scramble to deal with tariff ripple effects and believes they steal attention away from the important basics.

"Frankly, the uncertainty is not helpful within the automakers and supply base because it's really taking their eye off the ball of running the business," Schuster said. "They've got to set up war rooms to put together contingency plans if those tariffs are in place."

Former General Motors Chairman Bob Lutz sits on the other side of the tariff fence. He believes GM's new guidance is precautionary and said the industry should keep doing what it's doing and be happy that Trump is pushing the agenda.

"What President Trump is trying to do is eradicate decades of trade inequality where the U.S. had almost no tariffs on certain things and the other countries had gigantic tariffs to where we have ongoing trade deficits, which is just sucking the wealth out of our country," Lutz said.

The head of the E.U. said that body is working on a zero tariff policy that would help end some of the uncertainty and concern.

Trump singled out the tariff trouble with soybeans and liquid natural gas, but not the auto industry.

About the Authors:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.

Derick is the Lead Digital Editor for ClickOnDetroit and has been with Local 4 News since April 2013. Derick specializes in breaking news, crime and local sports.