Tell us what you really think/The cost of QE

Coincidentally, just days after the 25% tariffs on all imports of steel and aluminum, the big auto maker CEO's spoke yesterday at the Wolfe Research Auto, Auto Tech and Semiconductor conference. Jim Farley in particular was not shy chiming in on both the threatened tariffs on Canada and Mexico that were pulled back and the new ones just implemented. He also had something to say about the IRA.

"There's a global street fight in the auto industry right now between electrification, zone electric architectures, and of course, kind of the emergence of the Chinese as a global force in our industry. And I think President Trump has talked a lot about making our US auto industry stronger, bringing more production here, more innovation in the US. And if his administration can achieve that, it would be one of the most signature accomplishments."

"So far, what we're seeing is a lot of cost, a lot of chaos. If you look at the tariffs, let's be real honest, long term, a 25% tariff across the Mexico and Canadian border will blow a hole in the US industry that we have never seen. And frankly, it gives free reign to South Korean and Japanese and European companies that are bringing 1.5 million to 2 million vehicles into the US that wouldn't be subject to those Mexican and Canadian tariffs. So, it would be one of the biggest windfalls for those companies ever. Meanwhile, we're USMCA compliant with almost all of our content, finished vehicles and components going across the borders to have that kind of size of tariff would be devastating."

On the impact from the new steel and aluminum tariffs, which we know the auto industry is a heavy user of. For Ford, "So in steel, we get 90% of that from the US. We get about 10% from Canada and nothing meaningful from Mexico. Aluminum also is not that impacted for us."

But, "The reality is, though, our suppliers have international sources for aluminum and steel. So that price will come through and there may be a speculative part in the market where prices come up because the tariffs are even rumored. So we'll have to deal with it. And that's what I'm talking about, cost and chaos. It's like a little here, a little there. A couple of weeks or a couple of months of vehicles crossing the border, components crossing the border, that's going to be a tariff. This is what we're dealing with right now."

On the possible repeal of the IRA, "We've already sunk capital, even though we've rationalized it in battery production and assembly plants all through Ohio, Michigan, Kentucky and Tennessee. And many of those jobs will be at risk if the IRA is repealed, big parts of it is repealed." I'll add, industry policy rarely works and just because other countries employ it doesn't mean we should.

Finally, Jim Farley said, "So, that's why tomorrow I'm going to DC. It's the second time I've been there in three weeks because they need to understand that there's a lot of policy uncertainty here."

Mary Barra, the CEO of GM also spoke at the conference and she seemed to be more measured in her answer addressing the tariff question: