By Ford Motor Co (NYSE: F) chief executive Jim Farley is concerned that President Trump’s planned tariffs could do more harm than good to the US automotive industry.
Raising tariffs against China, Mexico, and Canada will put American automakers at a disadvantage compared to their foreign rivals like Toyota and Hyundai, he argued on the earnings call last night.
Ford came in ahead of Street estimates for its fiscal fourth quarter on Wednesday.
Still, the company’s share price is down about 5.0% at writing because its management guided for a turbulent year ahead.
Trump tariffs could cost billions to Ford
Farley expects 25% tariffs on goods from Canada and Mexico (if executed) to cost “billions and billions” to his company in profits, potentially leading to layoffs and higher prices for consumers.
Meanwhile, the likes of Toyota and Hyundai will be able to continue importing vehicles from Korea or Japan at little to no duties.
All in all, Trump tariffs will create an uneven playing field, giving foreign automakers a competitive advantage over their American counterparts, he added.
Farley called on the Trump administration to adopt a more comprehensive and fair approach to tariffs, one that does not unfairly penalize US companies with significant operations in North America.
There are millions of vehicles coming into our country that are not being applied to these tariffs. If we’re going to have a tariff policy … it better be comprehensive for our industry.
Ford Q4 earnings: model e loses over $5 billion
Farley’s remarks arrive at a time when Ford is already grappling with several challenges related to profitability of its “model e” electric vehicles business and costlier launch of new models at large.
In 2024, the legacy automaker’s EV business lost more than $5.0 billion, including $1.39 billion in the fourth quarter.
Ford expects its adjusted earnings before interest and taxes (EBIT) to fall between $7 billion and $8.5 billion this year – down significantly from $10.2 billion in 2024.
Amidst these challenges, the uncertainty surrounding tariffs adds to the existing pressure on Ford’s operations.
Nonetheless, Ford stock remains attractive for income investors as it currently pays a dividend yield of a rather lucrative 5.99%.
Trump tariffs mean the same for GM and Stellantis
Investors should know that Trump tariffs could mean the same for other local automakers like General Motors and Stellantis as well.
These companies will also likely face higher costs and potential disruptions to their supply chains, which could lead to increased prices for consumers.
The tariff plans have already made some of the automakers consider shifting production to the US or other countries to mitigate the related downside.
That said, the big three – Ford, GM, and Stellantis have been in a downtrend since the election day (November 6th).
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