Ford Motor Co. said on Monday that it expects to take a $1.5bn (€1.39bn) hit to its profit, before interest and taxes, as a result of tariffs this year. The company also withdrew its full-year financial guidance and suspended releasing any new one, due to the uncertainty created by the Trump administration’s evolving trade policy.
The carmaker is less affected by President Trump’s 25% tariffs on vehicles than other automakers.
Last week, General Motors said it is bracing for a potential impact from auto tariffs as high as $5bn (€4.4bn) in 2025. Ford and Tesla are expected to see a smaller impact from tariffs than GM and other automakers because they assemble more of their cars in the US. Still, what impact they do see won’t be insignificant.
Ford originally forecast 2025 earnings before interest and taxes in a range of $7bn to $8.5bn (€6.2bn-7.5bn), but on Monday, the company said the risks associated with tariffs “make updating full year guidance challenging right now given the potential range of outcomes.”
Ford CEO Jim Farley has been touting the advantage that higher domestic production gives his company, and he did so again Monday, while acknowledging that the shake-up to the industry from tariffs is still in its early stages.
“It’s too early to gauge the related market dynamics, including the potential industry wide supply chain disruptions,” Farley said on an earnings call with analysts. “Automakers with the largest US footprint will have a big advantage, and, boy, that is true for Ford. It puts us in the pole position.”
The potential impact of tariffs dominated Ford’s earnings calls, with one executive noting how just a little trouble with a few parts could have a dramatic effect.
“The rare earth materials from China, for example, how they are imported, not just for us, but for the entire industry, has become rather complicated over the last few weeks,” Chief Operating Officer Kumar Galhotra said. “It would take only a few parts to potentially cause some disruption into our production.”
First quarter (Q1) results
The announcement came as the automaker reported its first quarterly results, with a sharp drop in its profits. The net income fell by about two-thirds in the first quarter to $471 million (€417m), from $1.33bn (€1.17bn), compared to the previous year.
Revenue dropped by 5% to $40.7bn (€35.9bn) year-on-year, “as a result of a reduction in wholesales stemming from a planned shutdown in certain plants related to new product launches and inventory rebalancing measures,” the quarterly report said.
The results topped the expectations of analysts surveyed by FactSet, who forecast revenue to be around $38bn (€33.5bn).
Outlook for the carmaking sector in the US
President Donald Trump says one goal of his trade policy is to move more manufacturing of products such as autos back to the US. Last week, Trump signed executive orders to relax some of his 25% tariffs on automobiles and auto parts in a move the president said would allow automakers more time to transition their manufacturing operations.
Automakers and independent analyses have indicated that the tariffs could raise prices, reduce sales and make US production less competitive worldwide. Ford, however, doesn’t expect significant price increases. According to CNN, the carmaker expects US car prices to rise by 1%-1.5% in the second half of this year, due to the imposed tariffs on both imported cars and auto parts.
Ford promised an update on the financial guidance when releasing its results from the second quarter of the year.
