ford halts 2025 outlook, hit by $2.5 billion tariff wall

2025-05-05 general

Detroit, Monday, 5 May 2025.
ford motor company has revised its 2025 financial projections. the revision follows an anticipated $2.5 billion hit from tariffs. despite exceeding wall street’s first-quarter expectations, the automaker cites too much uncertainty. the tariff burden makes reliable financial forecasting difficult. the anticipated $2.5 billion impact is due to president donald trump’s tariffs. ford expects to offset $1 billion of the costs, reducing the total impact to $1.5 billion. this move raises questions about ford’s financial resilience in the face of escalating trade tensions.

Tariffs and financial impact

Ford Motor Company’s decision to suspend its 2025 financial guidance stems from the expected $2.5 billion impact of tariffs implemented by President Donald Trump [1]. These tariffs include a 25% levy on imported vehicles and a 25% levy on auto parts that do not comply with the United States-Mexico-Canada Agreement [1]. While Ford anticipates offsetting $1 billion of these costs, a net impact of $1.5 billion remains, creating significant financial headwinds [1]. This situation mirrors General Motors, which also lowered its 2025 guidance and expects to offset at least 30% of its tariff expenses [1].

Q1 earnings beat expectations

Despite the tariff concerns, Ford’s first-quarter earnings surpassed Wall Street expectations [1]. The adjusted earnings per share (EPS) were $0.14, significantly higher than the expected $0.02 [1]. Automotive revenue reached $37.42 billion, exceeding the anticipated $36.21 billion [1]. However, these positive results are overshadowed by the uncertainty introduced by the tariffs, impacting investor confidence and the company’s ability to provide reliable future projections [1]. Ford’s CFO, Sherry House, stated that Q1 results indicate the Ford+ turnaround plan is effective [1].

Segment performance mixed

Ford’s various business segments experienced mixed results in the first quarter. The ‘Blue’ operations saw a 3% revenue decline and a nearly 90% drop in EBIT to $96 million [1]. The ‘Pro’ commercial business reported a 16% revenue decline to $15.2 billion, with EBIT results of $1.31 billion, a decrease from over $3 billion in the previous year [1]. In contrast, the ‘Model e’ electric vehicle business reduced its losses from $1.33 billion a year prior to $849 million during the first quarter [1]. These varied performances underscore the complexities within Ford’s overall financial picture [1].

Tariff impact adjustments

Ford has actively sought to mitigate the impact of tariffs. Adjustments have lowered the initial first-quarter tariff impact of approximately $200 million by 35% [1]. However, the broader implications of the tariffs remain a concern, especially given the potential for increased costs and disruptions to the supply chain. According to Liu Jinsheng, President of Jiangling Ford Technology, Ford is adopting a strategy to stabilize consumers and ensure supply continuity by accelerating the localization of imported components [2]. This involves discussions with factories in both the U.S. and China to promote domestic production [2].

Industry-wide concerns and potential relief

The automotive industry as a whole is grappling with the effects of the tariffs. Some reports suggest the Trump administration is considering adjustments to the auto tariff policy, potentially involving partial exemptions or transitional arrangements [8]. A White House official indicated that imported vehicles would also receive exemptions from separate tariffs on aluminum and steel to prevent multiple layers of taxation [8]. Such measures aim to alleviate the strain on manufacturers, suppliers, and consumers, while encouraging domestic production [8]. Ford CEO Jim Farley has expressed support for these decisions, recognizing their potential to mitigate the impact of tariffs [8].

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