Ford and GM Face Tariffs: CEO Farley Optimistic Amid Uncertainty

Feb. 1, 2023

US automakers Ford (F) and General Motors (GM) confront potential tariffs on February 1st. President Trump has reiterated plans to impose a 25% levy on imports from Mexico and Canada, where manufacturers produce a significant portion of vehicles for the American market.

Ford CEO Jim Farley remains optimistic, emphasizing the company's substantial domestic production. "We think this will play out over the next couple of months," Farley stated to Yahoo Finance. "Ford has the largest US manufacturing footprint, and we're encouraged by the administration's support for the auto industry and its impact on our economy."

Farley believes Ford is well-positioned, highlighting the automaker's leading position in the lucrative F-150 truck segment. The F-150 has been the top-selling pickup truck for nearly five decades and is entirely manufactured in the United States.

While Ford supports policies that prioritize the auto industry, Farley acknowledges concerns regarding the Trump administration's environmental and economic initiatives. "We think there are a couple of policy areas that the administration will focus on that are important for our country," Farley said, citing CO2 emissions, EV tax credits, and tariffs.

The administration's reversal of Biden's executive order on CO2 emissions eliminates a federal goal of 50% EV sales by 2030. Although this may benefit Ford's production of high-profit gas vehicles, Farley emphasizes the need for investment in EV transition. The uncertain regulatory environment poses challenges for capital-intensive industries, including automotive.

Additionally, the Trump White House's proposed elimination of the $7,500 IRA EV tax credit raises concerns for Ford, which has benefited significantly from this incentive. "The loss of consumer credits would hurt sales," said Farley.

However, Ford remains committed to EV development, with plans to introduce profitable second-generation EVs in the near future. "We're deep into it," Farley said about the team's EV efforts. "We have a really exciting platform that our team in California has developed."

"We're retooling the factory soon, and that whole new lineup of commercial and small, affordable EVs will be coming out from Ford in a couple of years," Farley added.