Ford Predicts a $1.5 Billion Hit From Tariffs in 2025

Ford released a quarterly earnings report that revealed some disappointing numbers. Shortly thereafter, the automaker’s 2025 full-year financial outlook was withdrawn, giving the company additional time to evaluate the adverse effects of President Donald Trump’s tariffs.

Overall, Ford expects a $2.5 billion impact from tariffs, according to CNBC. However, to mitigate the financial damages, the company will take various actions, including some price and volume adjustments, to offset about $1 billion of the costs. The remaining $1.5 billion will need to be absorbed in other ways.

To justify pulling its guidance, Ford cited “near-term risks” such as possible production delays due to supply chain interruptions. Other potential unknowns included potential higher tariffs being implemented, as well as retaliatory tariffs.

“It’s too early to gauge the related market dynamics, including the potential industrywide supply chain disruptions,” said CEO Jim Farley, per AP News.

Right now, the automotive industry is dealing with 25% tariffs on imported auto parts not compliant with the United States-Mexico-Canada Agreement. Vehicles entering the U.S. are also subject to 25% customs duty fees.

According to Chief Financial Officer Sherry House, the impact of the current tariffs is evenly split between imported vehicles and automotive parts. Under the current tariff policy, Ford will likely sell 500,000 fewer vehicles than the company had previously expected.

Similar to Ford, General Motors will also see a significant impact from Trump’s tariffs. According to CEO Mary Barra, tariffs are likely to cost the automaker between $4 billion and $5 billion before the year is up. However, the executive is also committed to keeping prices level.

Car Makers Like Ford and Consumers Are Navigating a Tariff Environment

Just as vehicle makers are nervous about tariffs, so are car buyers. In April, fear of tariff-related price hikes prompted a surge in car sales. With import costs increasing and vehicle inventories falling, consumers took advantage of current prices instead of risking potentially paying more later.

According to Ford, sales went up 16%, selling 208,675 vehicles during the month. Comparatively, the company sold just under 179,600 in April 2024.

It wasn’t just Ford. GM clocked a 20% rise in units, with customers buying 267,051 vehicles in April.

In the first quarter of 2025, Ford’s total revenue fell 5%, reaching $40.7 billion. Net income for the Detroit-based company dropped to $471 million from $1.33 billion earned for the same period last year. Prior to withdrawing it 2025 guidance, Ford had initially predicted 2025 earnings of $7 billion to $8.5 billion.