Ford Motor Co. suspended its full-year financial guidance and said President Donald Trump’s auto tariffs will take a toll on profit, joining rivals stung by volatile global trade policies.
The automaker expects the duties to reduce 2025 adjusted earnings before interest and taxes by about US$1.5 billion on a net basis this year, it said while reporting a first-quarter profit that beat Wall Street’s estimates. The company’s total tariff impact is about $2.5 billion, and it believes it can offset about $1 billion of that.
Ford’s shares fell less than 1 per cent at 9:32 a.m. in New York on Tuesday. The stock had gained 2.7 per cent this year through Monday’s close, better than the 3.9 per cent decline by the S&P 500 Index. The company plans to provide an updated outlook when it reports second-quarter earnings.
Ford cited seven factors in withdrawing its earlier forecast for as much as $8.5 billion in adjusted Ebit this year, including potential “industrywide supply chain disruption” tied to Trump’s duties and the risk that levies may increase in the future.
Piper Sandler analyst Alexander Potter said the decision to suspend guidance was not a surprise given the tariff-related uncertainty.
“Like Ford, we struggle to defend our forecast in such a volatile macro environment. We are cutting our estimates to reflect tariff-related headwinds, but frankly, we’re unsure if we’re cutting them by enough (or by too much),” Potter said in a client note.
Ford is the latest automaker to point to the steep costs of Trump’s back-and-forth campaign to reshape global trade routes. Trump has said 25 per cent tariffs imposed on imported vehicles and parts are needed to bring more production and jobs to the U.S. Automakers have warned that broad, lasting tariffs will increase costs, jeopardize employment and potentially increase new-car prices that are already nearing $50,000 on average.
Chief Executive Officer Jim Farley acknowledged how difficult it is to predict the tariffs’ ultimate impact on costs, especially when the Trump administration also is renegotiating trade deals, including the agreement between the U.S., Canada and Mexico.
“It’s a pretty dynamic situation, I think this is all really new for all of us,” Farley said Monday during a call with analysts. “We should just all expect to be a little bit patient during this time to see how these policies kind of work out.”
Farley last week said the company won’t increase the price of its vehicles until it sees how rivals respond to added tariff costs.
The $1.5 billion hit Ford now expects comes despite relief granted to automakers last week. Trump spared imports subject to the auto tariffs from paying additional levies targeting other goods, such as steel and aluminum. The White House also will phase in tariffs on auto parts over two years to give companies time to move production to the U.S.
‘Huge Numbers’
Ford said Monday it is looking for ways to build more parts in the U.S.. But Farley said Ford has let the White House know the cost these changes will have on its business.
“These are huge numbers,” Farley said of the $2.5 billion gross tariff hit Ford is taking. “We’ve been very clear with the government about the flexibility we need.”
To blunt the effect of tariffs, Ford is using so-called bonded transportation to shield parts from levies as they cross international borders, among other actions, Chief Financial Officer Sherry House told reporters.
The White House actions announced last week were “really important steps forward,” House said on a call with reporters on Monday, noting that trade policy continues to be uncertain. Ford is also waiting to see if it can receive credit for the U.S. content in vehicles it imports from Mexico, she said.
Ford’s tariff exposure is less than its Detroit competitors because the Dearborn, Michigan-based automaker domestically produces 80 per cent of the cars it sells in the U.S. General Motors Co. last week slashed its profit outlook for the year and said its tariff exposure was as much as $5 billion. GM on May 2 cut jobs and production at a Canadian plant producing Chevrolet Silverado pickups as it moves production of those models to a plant in Indiana.
Ford has struggled with higher warranty costs and other expenses, including losses on electric vehicles it has said may reach $5.5 billion this year. The cost of launching redesigned versions of its big Expedition and Lincoln Navigator sport-utility vehicles in the first quarter also sapped profits.
Ford’s first-quarter adjusted profit was 14 cents a share, better than the 4-cent average loss expected by analysts.
Division Results
Ford Blue, the automaker’s unit that produces traditional internal combustion engine vehicles and gas-electric hybrids, saw earnings before interest and taxes plummet to $96 million from $901 million a year earlier, as the cost to launch the Expedition and Navigator SUVs weighed on results. Still, that’s better than the $288 million loss forecast by Wall Street. Ford’s first quarter U.S. vehicle sales fell 1.3 per cent.
Ford Pro, the automaker’s highly profitable commercial vehicle business, posted earnings before interest and taxes of $1.3 billion, roughly in line with analyst expectations.
Model E, Ford’s electric vehicle unit, experienced a first-quarter loss before interest and taxes of $849 million, less than the $1.4 billion deficit analysts had predicted. Ford’s EV sales rose 11.5 per cent in the first quarter, but accounted for just 4.5 per cent of the company’s overall deliveries.
Keith Naughton, Bloomberg News
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