Ford Expects $1.5 Billion Hit From Tariffs, No Notable Industrywide Vehicle Price Hikes

The company’s first-quarter earnings were down from a year ago but exceeded market expectations.

The 2024 Ford F-150 truck is assembled at a plant in Dearborn, Mich., on April 11, 2024. Carlos Osorio/AP Photo

U.S. automaker Ford Motor Co. estimated on May 5 that tariff-related policy developments will hit the company’s bottom line by $1.5 billion through 2025, but said it does not expect industrywide price hikes in the United States this year.

For the quarter ended March 31, Ford reported adjusted earnings of $1 billion, or 14 cents per share, down 64.5 percent from operating earnings of $2.8 billion, or 49 cents per share, a year ago. First quarter revenue fell 4.9 percent, to $40.7 billion, from $42.8 billion a year ago.

According to FactSet, Wall Street had expected the U.S. automaker to report a first-quarter loss of two cents per share on revenue of nearly $36 billion.

Meanwhile, the Dearborn, Michigan-based auto giant suspended its full-year financial outlook, saying it will work with the Trump administration to better understand how tariff policy impacts the auto industry and its global manufacturing operations.

During a conference call with Wall Street analysts after the close of the market, Ford CEO Jim Farley and chief financial officer Sherry House said it was too early to gauge competitors’ response and other potential industrywide supply chain disruptions that tariffs will have on the company’s manufacturing operations.

Farley also stated that Ford supports the administration’s goal to strengthen the U.S. economy by growing American manufacturing and appreciates its ongoing cooperation with policymakers.

“As America’s largest auto manufacturer, our engagement with Washington is helping U.S. policymakers better understand how their proposed policy changes would impact our industry and, of course, our communities,” Farley said.

In late March, President Donald Trump initially imposed a 25 percent tariff on foreign automobiles and certain imported auto parts.

The auto tariffs apply to all imported vehicles and certain auto parts unless they meet specific criteria under the United States-Mexico-Canada Agreement (USMCA). Any vehicle or part not substantially produced in the United States will be subject to the full 25 percent tariff.

Last week, Trump signed another executive order easing those original tariffs. The new order allows reimbursements for domestic car producers importing car parts that were subject to tariffs starting this past weekend. The maximum reimbursement will be 3.75 percent of the value of domestically produced cars. The cap will decrease to 2.5 percent for the second year and be phased out entirely thereafter.

“It’s clear, however, that in this new environment, automakers with the largest U.S. footprint will have a big advantage. And boy, if that’s true for Ford? It puts us in the pole position, plus we have the large value unlock even beyond that,” Farley said.

Farley and his executive team said that the gross impact of tariffs on the company’s earnings in 2025 would total $2.5 billion, including levies on some parts that Ford imports from China. About $1.5 billion of that cost would be offset by recovery actions such as lower domestic steel prices from President Trump’s trade policy on imported steel and aluminum.

Ford expects U.S. industry sales to be roughly 15.5 million for the year, down by 5 million units compared with the forecast before the tariffs.

Meanwhile, the company expects vehicle prices across the industry to rise by 1 percent to 1.5 percent in the second half of the year, but average prices for the full year are expected to remain flat compared with last year.

Farley and other Ford executives also noted that the company is assessing near-term resourcing actions to increase the use of U.S. parts in Ford vehicles, from its best-selling Taurus and F-150 truck to its signature Mustang and fast-growing electric and hybrid cars.

That assessment has led the company to stop exporting automobiles to China, said Farley, adding that Ford would continue to use the nation as a hub to leverage trade to ASEAN nations, Australia, South America, and other countries where U.S. trade relations remain favorable.

Farley said the Detroit automaker assembled over 300,000 more vehicles in the United States than its closest competitor. He also said that excluding the impact of tariffs, the company is still on course to deliver $1 billion in net cost savings in 2025. Capital spending for the year is expected to range from $8 billion to $9 billion.

Ford’s shares fell 2.46 percent or 25 cents in after-hours trading at $10.17. The company’s stock closed earlier at $10.2 during the May 5 session.