Ford Motor Co. F CEO Jim Farley addressed the uncertainty surrounding proposed tariffs on imports from Mexico and Canada on U.S. automakers, saying it would wipe out billions of dollars of industry profits if protracted.
What Happened: President Donald Trump proposed tariffs of 25% on goods imported from Mexico and Canada over the last weekend and 10% on imports from China. Trump, however, delayed the imposition of the levies for 30 days after conversations with leaders from Mexico and Canada on Monday.
The Trump Presidency has created significant uncertainty around the U.S. auto market given automakers including Ford, General Motors, Toyota, Honda, and Volkswagen build vehicles in Mexico. U.S. automakers also rely on parts from across the border for manufacturing.
Farley on Wednesday, however, said that the company will be able to manage a few weeks of tariffs.
“I think with changing our stock level of our components, both ourselves and our suppliers and changing our manufacturing patterns in both Mexico, especially, and the US, we can make sure nothing crosses the border for a couple of weeks,” Farley said.
However, if the tariffs are drawn out, it would have a huge impact on the industry, he added.
“There’s no question that tariffs at 25% level from Canada, Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out and adverse effect on the US jobs as well as the entire value system in our industry. Tariffs would also mean higher prices for customers,” he said.
However, Farley also said that the Trump administration is committed to strengthening the nation’s auto industry.
Furthermore, over 80% of Ford’s vehicles are made in the U.S., and over half of the company’s engines, more than many of its rivals, Farley said.
Why It Matters: Ford is the first U.S. automaker to report its results after Trump proposed tariffs.
Farley on Wednesday said that several Asian automakers including Hyundai, Kia, and Toyota are able to import their vehicles into the U.S. with no “incremental tariffs.”
“…if we’re going to have a tariff policy…it better be comprehensive for our industry. We can’t just cherry pick one place or the other because this is a bonanza for our import competitors,” he added.
Ford on Wednesday said that it expected overall full-year adjusted EBIT of $7 billion to $8 billion for 2025, lower than the adjusted EBIT of $10.2 billion reported for 2024. The company pinned the disappointing forecast on headwinds related to market factors.
If tariffs are imposed, the precise impact of it will depend on other factors such as possible duty drawbacks and how the company’s suppliers would react, company CFO Sherry House said.
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