Ford CEO: Tariffs Would Cripple Auto Industry
Ford Motor Company (F) CEO Jim Farley has warned that President Donald Trump's proposed tariffs on imports from Mexico and Canada would have a devastating impact on the U.S. automotive industry.
Farley stated on an earnings call that a 25% tariff on imports from those countries would "wipe out billions of dollars of industry profits" and lead to "adverse effects on US jobs" and "higher prices for customers."
The auto industry accounts for 26% of imports from Mexico to the US, and 12% from Canada. Farley estimates that tariffs would be "manageable" for a few weeks, but would eventually cause significant financial pain.
Farley's concerns echo those of General Motors (GM) CEO Mary Barra, who warned that tariffs would undermine GM's profit outlook.
GM relies heavily on plants in Mexico for production of pickup trucks and EVs. Ford also manufactures 12% of its products in Mexico and Canada.
Analysts are concerned that tariffs could lead to capacity constraints in the US and higher consumer prices. Kelley Blue Book estimates that the average cost of a car could increase by $3,000 if 25% tariffs are implemented.
Ford's cautious earnings outlook for 2025 reflects the potential impact of tariffs. The company projects adjusted operating profits between $7 billion and $8.5 billion, significantly lower than the $10.2 billion reported in 2024.