Inside Ford’s tariff damage control
Ford has pulled its annual guidance after reporting its Q1 earnings, noting tariffs will cost the company about $1.5 billion in revenue before interest and taxes. The U.S. tariffs on imported vehicles and parts are predicted to add $2.5 billion to Ford’s overall 2025 costs, but the automaker lowered this figure by around $1 billion through actions like moving vehicles from Mexico to Canada with bond carriers so they don’t face levies, Reuters reports.
Bond carriers are transportation companies authorized by customs to move goods across international borders under a customs bond, allowing shipments to cross into the U.S. without immediately being subject to customs duties or tariffs at the border. Ford also mitigated tariff impacts by halting exports to China, but will continue using the country as an export hub to regions like Australia, South America, and other areas with favorable trade relations, according to the Detroit Free Press.
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The Michigan-based auto manufacturer gave four material reasons for pulling its 2025 guidance. These reasons include an industry-wide supply chain disruption impacting production, additional or increased U.S. tariffs, changes in tariff implementation, the possibility of retaliatory tariffs from other countries or other restrictions, and uncertainty surrounding tax and emission policy, MarketWatch reports. Ford noted that its forecast of a $1.5 billion projected tariff hit during 2025 is subject to ongoing policy developments. The automaker expects to update Wall Street on its 2025 guidance when reporting its Q2 earnings around mid-summer.
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Ford Q1 Results
Earnings per share at Ford declined to 14 cents during Q1, down from 49 cents year-over-year, but London Stock Exchange Group analysts expected this figure to be significantly lower at two cents per share. Ford’s net income dropped from $1.3 billion a year earlier to $471 million, and its gross revenue fell 5% to $40.7 billion, which still beat the $36 billion expectation. Ford cited production disruptions with numerous product launches at several plants as negatively impacting Q1 results, but better-than-expected figures for January-March helped ease tariff uncertainty. The automaker made progress throughout Q1 by fulfilling cost reduction and quality improvement goals, which are keeping the company on pace to deliver $1 billion in net cost reductions for 2025, excluding tariff impacts.
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Final thoughts
Ford’s CEO, Jim Farley, highlighted how automakers with the most significant U.S. footprint will have a big advantage against tariffs, and said that Ford is one of them. However, Ford’s footprint isn’t as large as some may imagine. Aside from its Mustang, Ford doesn’t produce any sedan or compact car models in the U.S., and one of the company’s executives noted how trouble with a few parts could have a highly detrimental impact.
Ford’s Chief Operating Officer, Kumar Galhotra, said during the company’s Q1 earnings call: “The rare earth materials from China, for example, how they are imported, not just for us, but for the entire industry, has become rather complicated over the last few weeks. It would take only a few parts to potentially cause some disruption into our production,” according to Insider Media. General Motors also suspended its 2025 financial guidance after Q1 and is facing steeper losses as high as $5 billion.
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