Ford CEO Warns Tariffs Would Harm Auto Industry, Jobs

Ford Motor Company (F) CEO Jim Farley has voiced strong concerns about the potential impact of tariffs on the auto industry, stating that they could significantly harm industry profits and job security in the United States.

Farley's comments follow the recent pause in tariff hikes on Canada and Mexico and the implementation of a 10% tariff on China. However, analysts warn that the tariffs could still disrupt auto supply chains, as Mexico and Canada account for a significant portion of auto imports into the US.

Farley emphasized that prolonged tariffs at a 25% level would have a "huge impact" on the industry, potentially eradicating billions of dollars in profits and adversely affecting job stability. He also noted that tariffs would lead to higher prices for customers.

Despite a pause on tariffs, Farley believes that even short-term tariffs could have negative consequences for Ford's financial performance. The company recently reported an operating loss of $5 billion in its Model E electric vehicle division, contributing to a 7% decline in adjusted earnings per share for the year.

Ford's share price reacted negatively to the announcement, falling 6% in pre-market trading. Investors are concerned about the impact of a lackluster quarter and the potential implications of further tariffs.

Farley's warnings echo those of General Motors (GM) CEO Mary Barra, who has expressed similar concerns about the impact of tariffs on GM's operations, particularly in Mexico and Canada, where the company produces profitable pickup trucks and EVs.

Analysts also anticipate that the tariffs could lead to increased auto prices, as manufacturers may need to pass on the additional costs to consumers. This could potentially dampen demand for new vehicles.

Ford has adopted a cautious outlook for 2025, projecting adjusted operating profits below last year's level. Analysts remain uncertain whether this conservative guidance is a sign of reduced risk or potential downside risks, such as elevated inventory days and launch costs associated with EV production.