Ford CEO Farley Warns Tariffs Could Damage Auto Industry

Ford (F) CEO Jim Farley has expressed concerns about the potential impact of tariffs on the automotive industry. During a recent earnings call, Farley warned that 25% tariffs on imports from Canada and Mexico could have a "huge impact" on the industry, leading to lost profits, higher consumer prices, and job losses.

The auto industry relies heavily on imports from Mexico and Canada, with 26% of imports from Mexico and 12% from Canada. Farley believes that tariffs could disrupt supply chains and damage the industry's profitability.

GM Echoing Concerns

Farley's concerns are echoed by General Motors (GM) CEO Mary Barra, who recently expressed fears that tariffs could impact GM's earnings. GM has five assembly plants in Canada and Mexico, and the company relies heavily on these plants for production of profitable pickup trucks and electric vehicles.

Potential Impact on Consumers

Analysts estimate that tariffs on Mexico and Canada could increase the average cost of a car by $3,000. This could deter consumers from purchasing new vehicles and drive them towards cheaper used car options.

Ford's Financial Outlook

In its recent earnings report, Ford provided a cautious outlook for 2025. The company expects adjusted operating profits of $7 billion to $8.5 billion, which would be a decrease from the $10.2 billion reported in 2024. This has raised concerns among investors about the company's ability to withstand potential tariff impacts.