On Wednesday, Ford Motor announced that U.S. tariffs on imported vehicles, along with materials like steel and aluminum, might be pricier than anticipated for this year. This news contributed to a drop of about 3% in the company’s stock during after-hours trading.
In their second quarter report, Ford noted an $800 million hit from tariffs. However, due to the company’s strong domestic manufacturing operations, the impact hasn’t been as pronounced as it has been for some of its competitors. For the fiscal year, Ford raised its revenue expectations, increasing the projected tariff impact from $500 million to as high as $3 billion.
Ford’s CEO, Jim Farley, shared that the organization maintains daily communication with the White House and aims to mitigate tariff expenses, especially concerning parts. “There are many advantages depending on how negotiations go with the administration,” he remarked.
The company’s Chief Financial Officer, Shelley House, indicated that the projection for duties in Mexico and Canada has prolonged more than originally thought, citing increased taxes on aluminum and steel as contributing factors.
After pausing in May to understand the effects of President Trump’s tariffs, Ford provided annual guidance on results on Wednesday.
Ford anticipates recording adjusted annual revenues of $7.5 billion, reducing its earlier forecast from $8.5 billion down from $7 billion set in February 2025.
The auto giant also reported a decline in earnings per share, which fell by 21% to 37 cents, missing the LSEG analysts’ expectation of 33 cents. The company experienced a quarterly net loss of $36 million, largely attributed to special charges linked to canceling certain electric SUVs and service actions from a $570 million recall.
Quarterly revenue was reported at $50.2 billion, reflecting a 5% rise compared to the previous year. Ford has been gaining market share through aggressive discount programs and its “zero, zero, zero, zero” initiative, which offers buyers zero down payment for 48 months, no interest, and the first 90 days payment-free for most vehicles.
“Ford’s significant revenue outperformance illustrates its pricing power, but the margin reduction indicates ongoing cost challenges,” noted Garrett Nelson, a research analyst at CFRA, in a memo.
Petrol-powered vehicle sales surged by 15.5% during the quarter, while hybrid options also gained popularity.
Ford highlighted that Washington’s tariffs contributed to an $800 million decrease in results for the quarter ending in June. In contrast, General Motors reported a heftier tariff burden of $1.1 billion this quarter, particularly from imported entry-level Chevrolet and Buick models sourced from Korea.
GM anticipates an annual tariff impact of between $4 billion and $5 billion but intends to offset roughly 30% of that. Ford, on the other hand, expects to counter $1 billion of its total duty costs.
Stellantis, maker of Jeep, also foresees tariffs adding approximately $1.7 billion to its annual expenses.
The White House did not respond to requests for comments on the car manufacturer’s forecast. Previously, Trump has suggested that such taxes would bring manufacturing back to the U.S.
According to a report from last year by GlobalData, Ford manufactures around 80% of the vehicles it sells in the U.S. domestically.
This strong foundation has helped cushion Ford against tariffs, though the automaker is still navigating the implications of rising costs for aluminum, steel, and copper, which have unsettled the industry. The management pointed out that supply issues with rare earth magnets from China also disrupted production in this quarter.
Challenges surrounding Ford’s EV investments and quality issues have also emerged as significant hurdles. Earlier this year, the company projected potential losses of up to $5.5 billion in its EV and software division by 2025, with that segment already facing an operating loss of $1.3 billion. Additionally, the elimination of the $7,500 consumer tax credit in September is expected to suppress EV sales growth further.
The automotive industry is grappling with costly quality issues and widespread recalls. Since becoming CEO in 2020, Jim Farley has made it a priority to reduce these persistent problems.
