Ford CEO Warns Tariffs Threaten Auto Industry Profits
Ford CEO Jim Farley has expressed concern over the potential impact of tariffs on the auto industry. Farley stated that tariffs on Canada and Mexico could have a "huge impact" on the industry, leading to billions of dollars in lost profits and adverse effects on US jobs.
The Trump administration has agreed to a 30-day pause on tariffs on Canada and Mexico, while a 10% tariff on China has been implemented. Experts believe that tariffs could disrupt auto supply chains, as the industry accounts for a significant portion of imports from both Mexico and Canada.
Farley believes that tariffs for a few weeks could be manageable, but would become detrimental to the company's financial performance in the long term. He emphasized the industry's importance to jobs, the economy, and national security.
Ford's share price fell after the company reported mixed earnings for 2024. While full-year sales increased, adjusted earnings per share declined. The company also reported a significant operating loss at its Model E electric vehicle division.
Farley's comments align with concerns raised by General Motors CEO Mary Barra, who warned that tariffs could have a negative impact on the company's profitability. GM produces pickup trucks in Mexico and relies on plants there for EV production.
Analysts have estimated that tariffs could increase the average cost of a car by $3,000. This could lead to a decline in demand for new vehicles or a shift towards cheaper used cars.
Ford has taken a cautious approach to its guidance for 2025, projecting lower operating profits than last year. Analysts have mixed opinions on the company's outlook, with some suggesting that it could indicate a conservative approach to risk management.