Ford's shares had risen about 3.8% this year until the close on Friday, May 2, surpassing the 3.3% drop of the S&P 500 index. The company plans to provide an updated outlook when it presents its second-quarter results.
Ford is the last automaker to highlight the high costs of Trump's rollercoaster campaign to restructure global trade routes. Trump has asserted the need to impose a 25% tariff on imported cars and parts to attract more production and jobs to the United States. However, automakers have warned that these broad and lasting tariffs will increase costs, threaten jobs, and could raise the prices of new cars.
Jim Farley, CEO of Ford, stated last week that the company will not raise vehicle prices until it sees how its competitors respond to the additional tariff costs. Ford expects Trump’s automotive tariffs to reduce its net earnings by $1.5 billion this year. The total impact of the tariffs is estimated at approximately $2.5 billion.
Ford cited seven factors for retracting its previous forecast of up to $8.5 billion in adjusted EBIT this year, including the potential disruption of the supply chain across the industry related to Trump's tariffs. Ford's shares fell 2.8% in after-hours trading on Monday, May 5.
The White House will also gradually apply tariffs on auto parts over two years to give companies time to shift production to the United States. Ford expects to receive credit for U.S. content in vehicles imported from Mexico.
Ford's tariff exposure is lower than that of its Detroit competitors, as the manufacturer produces 80% of the cars it sells in the U.S. in the country. General Motors cut its profit outlook for the year last week and stated that its tariff exposure amounted to $5 billion.
President Trump exempted imports subject to automotive tariffs from additional charges on other products, such as steel and aluminum. On May 2, GM cut jobs and production at a Canadian plant that produces Chevrolet Silverado trucks, shifting production of those models to a plant in Indiana.