Ford is almost American. Although many of its competitors built most of the vehicles abroad, the Detroit automaker produces about 80% of U.S. vehicles at home. Nonetheless, Ford cannot exempt the Trump administration from tariffs. CEO Jim Farley said yesterday (May 5) that the company expects a $1.5 billion attack this year due to tariffs – after absorbing $1 billion in impact by cutting costs.
Ford cited ongoing uncertainty about tariffs, citing ongoing uncertainty, suspending its 2025 financial guidance as it reported revenue for the first quarter. “It’s a very dynamic situation – I think it’s new for all of us,” Farley told analysts on the phone.
Ford’s revenue was $40.7 billion in the January-March quarter, down 5% from the same period last year, attributed to planned factory closures. Net income fell 64% to $471 million. But both figures exceeded Wall Street expectations, bringing Ford stock up 3% today (May 6).
Ford taxes imported cars at 25% and car components at 25%. The company said this puts its total tariff burden from 2025 to $2.5 billion. However, it expects to make up about $1 billion by excluding bond carriers, purchasing more U.S. auto components and stopping bond shipments from bond carriers exporting to China (to avoid retaliatory tariffs on U.S. goods).
These strategies have shown results. In the first quarter, Ford lowered tariff fees by nearly 35% to $200 million. “Our team is in the tide,” said Chief Operating Officer Kumar Galhotra.
Ford will also take advantage of the surge in consumer demand before expected price increases. Farley said the company is offering employee pricing on its 2024 and 2025 models, and the promotion “shrinks our dealership stock.” The rewards program is expected to last until June.
Although Ford has not announced any official pricing changes, Farley recently acknowledged that tariff-related increases are possible. Currently, the company predicts that industry prices may rise by 1% to 1.5% in the second half of the year.
Even with the increased costs, Farley remains optimistic. Compared to competitors like General Motors, the company built about half of American cars abroad and is expected to have $4 billion to $5 billion in tariff influence – Ford is in a better position. “The automaker with the largest footprint in the United States will have a big advantage,” Farley said. “And boy, that’s what Ford is.”
