On the 12th (local time), the '25% tariff on steel and aluminum' measure by U.S. President Donald Trump came into effect, raising concerns over rising car prices in the United States. There are also assessments that Trump's tariff measure, which advocates 'America First,' ironically affects cars produced in the U.S.
On the 12th (local time), The Wall Street Journal (WSJ) reported that the Ford F-150 may be one of the items most severely impacted by Trump's steel and aluminum tariffs. The F-150, the best-selling vehicle in the United States and a major source of revenue for Ford, is one of the vehicles using the most aluminum in the automotive industry.
Ford revealed in 2014 that most of the body and cargo space of the F-150 is made of aluminum. The goal is to reduce the vehicle's weight by using relatively lightweight aluminum more extensively, ultimately increasing fuel efficiency. For this reason, Tesla, an electric vehicle (EV) manufacturer, also extensively uses aluminum in vehicle frames and other components.
The issue is that most of the high-quality aluminum used by U.S. automakers is sourced from Canada. According to the Aluminum Association, 75% of the primary aluminum currently used in the U.S. is supplied from Canada. As a result, imposing a 25% tariff on imported aluminum could severely impact U.S. automakers.
Ford procures most of its aluminum sheets from U.S. rolling mills; however, these companies source their raw material, primary aluminum, from Canada. However, since 90% of steel is entirely sourced from the U.S., the damage compared to aluminum is relatively smaller.
A Ford spokesperson noted, "We are trying to find solutions for the additional expenses due to tariffs, but it will not be easy," explaining that it will take years to improve the supply chain for aluminum sourced for American cars.
Industry experts are concerned about rising prices of American cars. Over the past decade, the average aluminum usage in American vehicles has increased by about 30%, and it is expected to exceed 500 pounds this year. According to a Barclays survey, if Trump's tariffs are applied, the production cost per vehicle could increase by an average of $400 (about 580,000 won).
The reason the U.S. heavily relies on Canada for primary aluminum is the high electricity costs. Aluminum smelters use a large amount of electricity, accounting for about 40% of their operating costs, and with rising electricity prices, operating aluminum smelters in the U.S. has become significantly less profitable. In contrast, Canada can operate smelters at low costs by utilizing hydroelectric power.
Bertrand Lacote, the global automotive practice leader at consulting firm The Carlyle Group, noted that many automakers have fixed metal price contracts, meaning the impact of tariffs on car prices may not appear for several months, but ultimately, "the consumer will bear the costs."