Ford Motor said it’s expecting to take a $US1.5 billion ($2.3 billion) hit this year because of tariffs. Ford said it’s also cancelling financial forecasts for the full year because of “tariff-related uncertainty.”
They’re the latest companies to join a lengthening list that have yanked their forecasts for the year given uncertainty about what Trump’s on-again, off-again rollout of tariffs will do to the economy. The hope is that Trump will relent on some of his tariffs after reaching trade deals with other countries. Without them, many investors expect the economy to fall into a recession.
Regardless, all the will-he-won’t-he uncertainty around tariffs has already made US households more pessimistic about the economy and could affect their long-term plans for purchases. That uncertainty has helped fuel a surge in imports ahead of potentially more severe tariffs ahead.
The US trade deficit soared to a record $US140.5 billion in March as consumers and businesses alike tried to get ahead of tariffs that went into effect in April and others that have been postponed until July. That follows another update from last week showing that the US economy shrank at a 0.3 per cent annual pace during the first quarter of the year because of a surge in imports.
Some companies say they’re already seeing impacts to their business from the uncertainty created by tariffs.
Food processing giant Archer Daniels Midland said that operating profit for agricultural services slumped 31 per cent during its most recent quarter because of trade policy uncertainty. The stock was up 2.4 per cent.
DoorDash fell 7.4 per cent after reporting weaker revenue than analysts expected for the latest quarter, though it may have also offered a more encouraging snapshot of how US households are doing. The company said order growth in its US marketplace remained healthy and consistent with average growth over the last year.
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Treasury yields were edging lower in the bond market. The yield on the 10-year Treasury slipped to 4.32 per cent from 4.36 per cent late on Monday.
The Federal Reserve is beginning a two-day meeting, and it will announce its next move on interest rates Wednesday. Virtually no one expects it to do anything to its main rate, even though Trump has been advocating for cuts.
“While the possibility still exists for potential rate cuts later this year, the economic picture is complicated, and it’s too early to know if or when those cuts might happen,” said Michele Raneri, vice president and head of US research and consulting at TransUnion.
Lower interest rates could help goose the economy, but they could also give inflation more fuel. And worries are already simmering that Trump’s tariffs could push inflation higher.
Markets were mixed across Europe and Asia. Indexes rose 1.1 per cent in Shanghai and 0.7 per cent in Hong Kong.
AP
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