Trump tariffs add $2.5 billion in costs as Ford halts China exports and braces for $5.5 billion EV shortfall
Ford Motor has suspended its annual guidance, citing uncertainty around US President Donald Trump's tariffs.
The company said the levies would reduce adjusted earnings before interest and taxes by about US$1.5bn, according to Reuters.
The automaker expects the tariffs to increase costs by US$2.5bn over the year, largely from vehicle imports from Mexico and China.
Although Ford has stopped automotive exports to China, it continues to import some models like the Lincoln Nautilus.
Executives said Ford managed to cut about US$1bn from the projected tariff hit by rerouting vehicles through Canada using bond carriers, thereby avoiding US import duties.
Ford issued the guidance suspension after the US stock market closed on Monday, and its shares fell 2.3 percent in after-hours trading.
“It’s still too early to fully understand our competitors’ responses to these tariffs,” said CEO Jim Farley. “It’s clear, however, that in this new environment, automakers with the largest US footprint will have a big advantage.”
Earlier this year, the company forecasted 2025 earnings before interest and taxes in the range of US$7bn to US$8.5bn, without including the effect of tariffs.
CFO Sherry House stated that Ford was on track to meet that target, excluding any tariff fallout.
While General Motors recently revised its forecast to reflect tariff impacts, Ford executives said they would wait for more clarity on consumer reactions and retaliatory measures before offering a new outlook.
Morningstar Research analyst David Whiston said, “It’s a bold move for them to withdraw guidance when GM gave revised guidance including tariffs, though to be fair things are very uncertain.”
Tariff policy has significantly affected automakers. Trump’s 25 percent tariff on imported vehicles is expected to add over US$100bn in costs for the US auto industry this year, based on some estimates.
Last month, the White House approved partial relief, allowing automakers credits worth up to 15 percent of the value of domestically assembled vehicles and easing other duty requirements.
General Motors projected up to US$5bn in tariff-related costs and cut its profit outlook earlier this month. Stellantis, the maker of Jeep, also suspended its guidance due to uncertainty tied to tariffs.
According to a note from Barclays analysts, “Investors have preferred Ford over GM given Ford has a much higher mix of US sales that are assembled in the US”.
The analysts cited Ford's 79 percent of US sales coming from US-assembled vehicles, compared to GM’s 53 percent.
Ford reported 14 cents earnings per share in the first quarter, surpassing LSEG analysts’ estimate of 2 cents per share but down from 49 cents the year before.
Despite earlier warnings about disruptions from new product launches, Ford’s cost and quality improvements helped the company beat expectations.
Revenue dropped 5 percent to US$40.7bn, still exceeding forecasts of about US$36bn.
Net income declined to US$471m from US$1.3bn a year ago. Executives said a rush of consumers buying vehicles ahead of potential price hikes, combined with market-share incentives, contributed to the earnings.
The company also faces mounting losses in its electric vehicle and software operations.
For 2025, Ford expects up to US$5.5bn in losses from these divisions. It has already recorded over US$10bn in related losses since 2023.
Reuters reported that Ford recently cancelled an advanced electrical vehicle architecture project called FNV4 after delays and rising costs.
Farley confirmed the report, saying the decision marks “a very significant save for capital efficiency.”
Ford Pro, its commercial vehicle arm, posted US$15.2bn in revenue in the first quarter, down 16 percent from a year earlier.
The gasoline-engine division recorded US$21bn, while the Model e division, which includes EVs and software, brought in US$1.2bn.
