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American Focus > Blog > Economy > Ford expects $1.5bn profit hit from Trump tariffs
Economy

Ford expects $1.5bn profit hit from Trump tariffs

Last updated: May 5, 2025 2:12 pm
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Ford expects .5bn profit hit from Trump tariffs
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Ford is bracing for a $1.5 billion hit to its operating profits this year due to the tariffs imposed by President Donald Trump, underscoring the ongoing challenges faced by the car industry in navigating the uncertainties of the current trade policy.

The Michigan-based automaker, in response to the unpredictability stemming from the tariffs, has withdrawn the financial guidance it previously provided three months ago. Originally, Ford had projected an operating profit range of $7 billion to $8.5 billion for 2025.

The company highlighted the potential disruptions to the supply chain caused by the tariffs, warning of possible industry-wide impacts on vehicle production. It also expressed concerns about the escalating tariffs, the evolving manner in which they are implemented, and the potential for retaliatory measures from other countries.

“These risks pose significant challenges to the industry and could have a substantial impact on financial performance, making it difficult to provide updated full-year guidance at this time given the range of potential outcomes,” Ford stated.

The global automotive sector is grappling with the implications of tariffs on imported vehicles and parts into the US, as the White House has been altering policies and extending deadlines for months. Last week, President Trump announced exemptions for parts from China and spared automakers from tariffs on steel and aluminum.

Despite these exemptions, General Motors recently revised its guidance downwards, citing the impact of tariffs. The company now anticipates adjusted operating earnings to range between $10 billion and $12.5 billion, representing a 23% decrease from the previous range.

See also  Here's a potential winner from Trump tariffs: American tourists traveling abroad

While Ford has a higher proportion of vehicles manufactured in the US compared to its competitors, it remains vulnerable to the effects of tariffs. The company estimated a $1.5 billion impact on adjusted earnings in 2025 due to the levies.

Ford’s CFO, Sherry House, noted that the company had managed to reduce tariff costs by nearly 35% in the first quarter through strategic measures such as transporting vehicles and parts from Mexico to Canada on bonded trucks, exempt from custom duties at the border.

However, Ford reported a 64% decline in net income to $471 million in the first quarter, with adjusted operating earnings dropping to $1 billion. Revenue also decreased by 5% to just under $41 billion due to planned shutdowns at various plants globally, including the critical Kentucky Truck Plant responsible for producing Ford’s Super Duty trucks.

In response to these developments, Ford’s shares dipped by 2.6% in after-hours trading on Monday.

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