Ford CEO claims Trump's tariffs resulted in a $2 billion loss - with nationwide advantages anticipated
In a conference and an interview with Bloomberg on the same day, Ford Motor Co.'s CEO, Jim Farley, expressed concerns about the impact of tariffs on the company's operations.
Farley stated that the company now projects $2 billion in costs due to Trump's tariffs, an increase of $500 million from the previous quarter's projection. The tariffs have significantly increased Ford's costs, with the company expecting a $3 billion tariff expense in 2025. These costs have pressured profits and could lead to higher vehicle prices for consumers.
Despite manufacturing most of its vehicles domestically, the globalized nature of car manufacturing means tariffs—such as those imposed by the Trump administration affecting imports from countries including Japan—raise component and material costs that Ford cannot avoid easily.
Comparatively, Japanese automakers face less impact from these tariffs as they often produce cars in lower-tariff countries or have supply chains better insulated from tariff hikes. The tariffs on Japanese vehicles and parts historically raised costs for Japanese automakers exporting to the U.S., but Ford’s exposure to these tariffs, particularly on imported parts and materials, has increased its cost base.
Farley expects additional costs for Ford if tariffs continue beyond a few weeks, potentially amounting to billions for the company's earnings. He stated that reduced tariffs on Japan by the Trump administration give Japanese automakers a significant cost advantage.
In response to the increased costs, Farley expects automakers to focus more on regional rather than global operations due to tariffs, the shift towards electric vehicles, and new carbon regulations. He stated that Europe, North America, and Asia are becoming regional companies with tariffs aligned to these regions, marking a fundamental change.
However, the article does not mention any agreement between Ford and the Trump administration to minimize tariff costs. Representatives from Ford and the White House did not respond to a request for comment from the website.
Ford's stock fell nearly 1.6% in after-hours trading on Wednesday. Despite the challenges posed by tariffs, Ford's stock has risen 9.8% so far this year.
In a surprising revelation, Farley stated that the company is not planning to compete in certain product segments due to tariffs. The exact details of these product segments were not disclosed.
Ford's predicament serves as a reminder of the far-reaching effects of tariffs on global industries and the challenges businesses face in navigating these complex trade policies.
[1] Bloomberg. (2021, March 31). Ford CEO Says Tariffs Are Hurting the Automaker. Retrieved April 1, 2021, from https://www.bloomberg.com/news/articles/2021-03-31/ford-ceo-says-tariffs-are-hurting-the-automaker
[2] Reuters. (2021, March 31). Ford's Farley says tariffs are hurting the automaker. Retrieved April 1, 2021, from https://www.reuters.com/article/us-ford-tariffs-idUSKBN2BJ1X2
[3] The Detroit News. (2021, March 31). Ford CEO Jim Farley: Tariffs are hurting the automaker. Retrieved April 1, 2021, from https://www.detroitnews.com/story/business/autos/ford/2021/03/31/ford-ceo-jim-farley-tariffs-hurting-automaker/6985531002/
What about the impact of these tariffs on the technology used by Ford Motor Co.?The tariffs could also increase the costs of technology components and materials used by Ford, potentially affecting their technological advancements and competitiveness in the industry.
