Ford is about as American as it gets. While many of its competitors build large portions of their vehicles abroad, the Detroit-based automaker manufactures about 80 percent of its U.S. vehicles domestically. Still, Ford isn’t immune to the Trump administration’s tariffs. CEO Jim Farley said yesterday (May 5) that the company expects to take a $1.5 billion hit this year due to tariffs—after absorbing $1 billion of their impact through cost cutting.
Citing ongoing tariff-related uncertainty, Ford suspended its financial guidance for 2025 as it reported first quarter earnings. “It’s a pretty dynamic situation—I think this is all really new for all of us,” Farley told analysts during the call.
In the January-March quarter, Ford posted $40.7 billion in revenue, down 5 percent from the same period last year, which it attributed to planned plant shutdowns. Net income fell 64 percent to $471 million. But both figures beat Wall Street expectations, sending Ford stock up 3 percent today (May 6).
Ford is hit by a 25 percent tariff on imported cars and an additional 25 percent levy on car components. Combined, that brings its total tariff burden for 2025 to $2.5 billion, the company said. However, it expects to recoup about $1 billion by transporting vehicles across North America with bond carriers that are exempt from tariffs, sourcing more U.S. auto components and halting exports to China (to avoid China’s retaliatory tariffs on American goods).
Those strategies are already showing results. In the first quarter, Ford lowered its tariff expenses by nearly 35 percent to $200 million. “Our team is in the trenches,” said chief operating officer Kumar Galhotra, crediting the company’s efforts to manage the situation.
Ford is also capitalizing on surging consumer demand ahead of anticipated price hikes. The company is offering employee pricing on its 2024 and 2025 models, a promotion that has “shrunk our stock in our dealerships,” according to Farley. The incentive program is expected to run through June.
While Ford hasn’t announced any official pricing changes, Farley recently acknowledged that increases tied to tariffs are possible. For now, the company forecasts that industry prices could rise by 1 percent to 1.5 percent in the second half of the year.
Even with the added costs, Farley remains optimistic. Compared to competitors like General Motors—which builds about half of its U.S. cars overseas and anticipates a $4 billion to $5 billion tariff impact—Ford appears better positioned. “Automakers with the largest U.S. footprint will have a big advantage,” Farley said. “And boy, is that true for Ford.”
