Companies Call for End to Tariffs and High Steel Prices

Ford sales to China have been hit hard, down 30 percent year-to-date in the first nine months of 2018, and plunging 43 percent in September. In response to U.S. tariffs, China raised its tariff on vehicle imports to 40 percent.

The recently resolved NAFTA renegotiation failed to address the steel and aluminum tariffs on imports from Canada and Mexico.

“We encourage all counties — but especially the U.S. and China — to work together,” Hinrichs said. “We think it’s in the global economy’s interest to do so.”

Earnings outlooks were downgraded by Ford, General Motors and FCA during the second quarter due to the higher cost of steel and aluminum.

Heavy machinery producer Caterpillar announced a record third-quarter profit-per-share on Tuesday, but it wasn’t enough to forestall a 9 percent drop in share price after announcing tariffs will cause full-year results to be at the low end of its outlook forecast.

“Manufacturing costs were higher due to increased material and freight costs. Material costs were higher primarily due to increases in steel prices and tariffs,” the company said. “Freight costs were unfavorable primarily due to supply chain inefficiencies as the industry continues to respond to strong global demand.”

Material costs jumped $40 million in the third quarter due to tariffs, prompting Caterpillar to announce a 1-4 percent price increase on its products worldwide as “a result of current industry factors and general economic conditions.”

The Dow plunged 500 points on Tuesday morning after investors were disappointed by third-quarter earnings announced by Caterpillar and 3M. Steel and aluminum tariffs and the growing trade war between the U.S. and China have many worrying that a global economic slowdown is on the horizon due to tighter global trade restrictions.

“We just look like we’re getting further away from a deal with China,” Art Hogan, chief market strategist at B. Riley FBR told CNBC. “The ramifications of a prolonged trade war are really seeping into investors’ minds right now. I think we’re coming to a capitulation point,” he said.

Carl Ichan, billionaire and supporter of President Donald Trump, warned that protectionist policies and tariffs could cause a stock market crash. In an interview with CNBC on Monday, Ichan said, “With tariffs, it’s a very dangerous game you’re playing. It helped bring the crash in 1929. I’m not a great supporter of that.”