Ford Motor Co. Feels the Pinch from US Trade Tariffs
Ford estimates a €1.39 billion loss due to Donald Trump's tariffs in 2025
Ford Motor Co. is taking a substantial financial hit due to US trade tariffs, particularly those enforced by the Trump administration. The carmaker anticipates a net negative impact of around $1.5 billion on its 2025 adjusted earnings before interest and taxes (EBIT) as a result of the 25% tariffs on imported vehicles and auto parts, e.g., from Canada and Mexico [1][3]. In terms of gross profit, the tariff exposure is around $2.5 billion, but Ford is introducing measures to lessen the impact, targeting a real effect on adjusted operating earnings of about $1.5 billion [2].
These tariffs have triggered various operational and strategic changes for Ford:- Rising Manufacturing Costs: The tariffs have added around $4,911 to the manufacturing cost per vehicle because of the higher cost of imported auto parts [2].- Suspended Guidance: Ford has paused its 2025 financial guidance due to persisting uncertainties related to trade policy and potential additional tariffs or countermeasures [1][3].- Market Influence: Ford now predicts a drop of roughly 500,000 units in US vehicle sales in 2025 compared to initial estimations, and has halted US vehicle exports to China [1].
In Comparison with Other Automakers
Ford appears to be in a more favorable position compared to some competitors due to its extensive US manufacturing capacity. Nevertheless, the tariffs are still expected to cause a substantial impact on the company [1].
- General Motors (GM): GM is bracing for a much heavier potential impact from the tariffs, with projections as high as $5 billion for 2025 [3].
- Tesla and Others: The specific figures for Tesla aren't provided, but the article suggests that both Ford and Tesla will be less affected by the tariffs than GM due to differences in supply chain structures and manufacturing locations [3].
Comparison Table: Tariff Impact Summary
| Automaker | Estimated 2025 Tariff Impact | Notes ||-----------|-----------------------------|-----------------------------------------------------------------------------------------|| Ford | $1.5 billion (EBIT) | Less affected than GM; suspended guidance [1][3]. || GM | Up to $5 billion | Higher exposure due to the supply chain structure [3]. || Tesla | Less than GM | Not quantified, but less affected than GM [3]. |
Key Insights
- Ford estimates a significant but manageable impact from US tariffs, projecting a $1.5 billion hit to 2025 adjusted EBIT.
- GM foresees a much larger impact, as much as $5 billion, signifying differences in global supply chains.
- Ford and Tesla generally expect to be less affected by the tariffs than GM. [3][1][2]
- Ford Motor Co. anticipates a $1.5 billion negative impact on its 2025 adjusted earnings before interest and taxes (EBIT) due to 25% tariffs, with a corresponding increase of around $4,911 in the manufacturing cost per vehicle.
- The financial outlook for Ford remains uncertain, as the company has suspended its 2025 financial guidance due to persisting uncertainties related to trade policy and potential additional tariffs or countermeasures.
- In comparison with General Motors, Ford appears to be in a more favorable position, as the tariffs are expected to cause a substantial but manageable impact on the company, whereas GM is bracing for a potential impact of up to $5 billion.
