Executives plot strategy to deal with 'cost and chaos' of Trump tariffs

By Nora Eckert, Allison Lampert and Ernest Scheyder

DETROIT/MONTREAL/HOUSTON (Reuters) -Executives across industries reliant on steel and aluminum imports were scrambling to offset the cost of Donald Trump's move to slap 25% tariffs on those key metals after previous tariff threats from the White House that were later scrapped.

Companies ranging from Coca-Cola and Ford to smaller aluminum, aerospace and appliance firms expect to be affected by U.S. President Donald Trump's moves, which Ford CEO Jim Farley said have so far added "a lot of cost and a lot of chaos" to American business. The tariffs, announced Monday, are expected to go into effect in mid-March.

But the White House's frequent threats of various shapes and sizes have left executives, investors and consumers unsettled, leaving them unclear whether the latest salvos will come to pass, or whether exemptions could be carved out for companies that lobby Trump.

"There's so much we don't know. We don't know if they will go in place. We don't know if there will be exemptions at all," said David Gitlin, CEO of heating and refrigeration company Carrier Global, on the company's earnings conference call Tuesday.

U.S. businesses have warned of fallout from tariffs, with many manufacturing companies finding it difficult to plan next steps. Executives are employing a number of strategies, including changing their mix of imports or passing on costs to consumers outright.

Coca-Cola, for instance, said it could shift its imports to rely more on plastic bottles if aluminum cans become more expensive. Fragrance company Coty said it has boosted U.S. inventories and is increasing production of fragrances in North Carolina. Coca Cola shares rose 3.6% on Tuesday while Coty shares were down 7.4%.

Ford is considering areas in which it can build up inventory to prepare for potential 25% tariffs on imports from Mexico and Canada, executives said Tuesday. Trump planned to initiate those duties earlier this month, before delaying them until March. A similar move against Colombia in January was dropped after about 12 hours.

General Motors said it cut inventory in its international plants by 30% to 40% before Trump's January 20 inauguration.

However, if suppliers are affected, that could hit the automakers as well. Global auto supplier Autoliv told Reuters that it plans to pass on increased costs due to tariffs to the car manufacturers, "which will likely result in higher car prices in the end."

'A LOT OF UNCERTAINTY'

Toby Gauld, president of Optima Aero, a Canadian-based company with divisions in the U.S. and France that supplies used parts for helicopters, said he is holding off on a $500,000 purchase from the United States due to concerns over possible tariffs and retaliatory duties since the equipment will not be available for eight months.

“Eight months from now is a lot of uncertainty,” he said.

Across-the-board tariffs against all aluminum and steel would leave companies without the option of shifting imports from countries with lower U.S. duties. Trump's goal is to boost U.S. output of aluminum and steel, industries the nation once dominated. U.S. demand for aluminum in 2024 was 4.3 million metric tons, and it imported 3.7 million metric tons, according to federal data.

Chicago-based Century Aluminum, which operates several U.S. aluminum smelters, said it strongly supports tariffs. "President Trump’s decisive action will protect national security and help level the playing field for America’s aluminum workers," said Century CEO Jesse Gary. The company's stock rose 6.5% on Tuesday.

But some U.S. companies urged Trump to consider the long-term effect of tariffs on the metals industry.

"There needs to be a long-term strategy to increase the amount of aluminum produced in the U.S. so we can be closer to self-sufficiency," said Brian Hesse, CEO of New York-based PerenniAL, a privately held distributor of slab, wire rod and billet produced with aluminum used to make wheels, window frames and other products.

He said any price increase that PerenniAL faces due to tariffs would ultimately reach the average consumer, he said.

Consumers are noticing. Consumer sentiment dropped to a seven-month low in February and inflation expectations soared, according to University of Michigan data.

Garry Douglas, president and CEO of the North Country Chamber of Commerce, said stockpiling is picking up, based on conversations with more than 40 regional manufacturers and warehouse operators in recent weeks.

Container shipments hit a record in January, while cross-border truck traffic from Canada and Mexico was busier in December 2024 than the previous two Decembers, according to federal data.

“There is no ability to suddenly substitute domestic supplies, particularly with aluminum with more than half coming from Quebec,” he said.

(Reporting by Nora Eckert in Detroit, Allison Lampert in Montreal and Ernest Scheyder in Houston; additional reporting by Juveria Tabassum and Ananya Rajesh in Bengaluru, Kalea Hall in Detroit; Writing by David Gaffen; Editing by Chizu Nomiyama and Nick Zieminski)