Automakers Brace for Potential Tariffs, Ford Prepares for Extended Fallout

Major US automakers, including Ford (F) and General Motors (GM), face looming tariffs on February 1st. President Trump has reaffirmed plans for a 25% tariff on imports from Mexico and Canada, where these automakers manufacture significant portions of their US-bound products.

Ford CEO Jim Farley anticipates the tariff issue extending beyond February and has implemented a contingency plan. "We think this will play out over the next couple of months," Farley stated. Ford's large US manufacturing presence positions it well to navigate potential tariffs, according to Farley.

"Ford has the largest US manufacturing footprint," he said. "We're encouraged by the administration's support for the auto industry and its positive impact on the economy."

Despite using production facilities in Mexico and Canada, Ford emphasizes that its flagship F-150 truck franchise is exclusively manufactured in the US. Farley expressed optimism about collaborating with the Trump administration to boost domestic employment and implement favorable policies.

However, Farley also acknowledged concerns about policy changes related to CO2 emissions and the EV tax credit. The rollback of Biden's executive order on CO2 emissions may pose challenges for automakers like Ford, which rely on profitable gas vehicles. Additionally, the potential elimination of the $7,500 EV tax credit could hamper EV sales, a sector in which Ford has made significant investments.

Despite these uncertainties, Ford remains committed to its EV strategy and is developing new EVs tailored to specific consumer needs. Farley emphasized that Ford is focusing on smaller and midsize EVs that align with the majority of EV buyers' requirements.

"We're deep into it," Farley said about Ford's EV development. "We have an exciting platform developed in California, and we're in the industrialization phase. We're retooling our factory soon, and expect to launch a new lineup of commercial and affordable EVs in the coming years."