Ford Motor Company has suspended its financial forecasts for the entirety of the current year, warning that tariffs imposed by President Donald Trump on automobiles will negatively affect its profits. Thus, Ford joins a growing list of competing companies that have been impacted by fluctuations in global trade policies.
The company stated that it expects the tariffs to reduce its adjusted earnings before interest and taxes for 2025 by about $1.5 billion on a net basis. This announcement came during the disclosure of first-quarter earnings that exceeded analysts' expectations. Ford clarified that the total impact of the tariffs is around $2.5 billion, but it might be able to offset $1 billion of that through certain logistical measures.
Ford pointed to seven factors that prompted it to withdraw its previous forecasts, which had indicated the potential for achieving up to $8.5 billion in adjusted earnings before interest and taxes this year. Among these factors is the possibility of "industry-wide supply chain disruptions" due to Trump's tariffs, along with the risks associated with the potential increase of these tariffs in the future.
Ford's shares dropped by 2.8% in extended trading on Monday. The company intends to issue new financial guidance when it announces second-quarter results.
Ford is the latest automaker to indicate the hefty costs incurred due to Trump’s changing trade policies. Trump had asserted that the 25% tariffs on imported cars and parts are necessary to attract more production and jobs back to the United States. However, automakers warned that these tariffs would raise costs and threaten jobs, potentially leading to higher prices for new cars.
The anticipated loss of $1.5 billion comes despite the relief granted to automakers last week, where the Trump administration exempted imports of cars from tariffs imposed on other goods.
The White House also announced that tariffs on auto parts will be implemented gradually over two years. Ford characterized these measures as "important steps forward," but it noted that trade policy remains unstable.
Ford faces other challenges in addition to the tariffs, such as rising warranty costs and anticipated losses in the electric vehicle sector. The company reported adjusted earnings of 14 cents per share in the first quarter, surpassing expectations that had indicated a loss.
