Ford Estimates Tariffs to Cut Earnings by $2 Billion This Year

Ford Motor has increased its estimate of tariff-related costs to $2 billion from $1.5 billion, citing over $800 million in tariffs paid last quarter. The automaker manufactures most of its vehicles in the US. The updated estimate is based on the latest trade tensions between the US and other countries.

Ford Motor has updated its estimate of tariff-related costs to $2 billion for 2025, a significant increase from the previously projected $1.5 billion. This revision is primarily due to over $800 million in tariffs paid during the second quarter of 2025. The automaker, which manufactures most of its vehicles in the United States, has cited ongoing trade tensions between the U.S. and other countries as the primary driver of this cost increase [1].

Jim Farley, Ford's CEO, stated that the company is experiencing a $2 billion net tariff expense, which is a result of the Trump administration's tariff policies. He noted that the reduced tariffs on Japan have provided a "meaningful" cost advantage to Japanese automakers, making it more challenging for Ford to compete on price [2]. Farley also mentioned that Ford is working with the Trump administration to minimize its tariff costs and has suspended its full-year guidance to reassess the impact of tariffs on its financials [3].

The updated tariff estimate has led to a 3% drop in Ford's shares in after-market trading. The company's adjusted operating profit guidance for 2025 has been revised down to $6.5 billion to $7.5 billion, from the previous forecast of $7 billion to $8.5 billion. This reduction in profit expectations is directly attributable to the increased tariff costs and other special charges, such as the cancellation of a three-row electric SUV and field service actions from a recall [3].

Ford's situation highlights the profound impact that trade policies and tariffs can have on major industries, even for companies with strong domestic manufacturing bases. Despite assembling the majority of its vehicles in the United States, Ford's complex, cross-border supply chains expose it to significant cost pressures when tariffs are imposed. The $2 billion net cost from the tariffs underscores how interconnected global manufacturing has become, and how protective trade measures can ripple through even well-established domestic companies [2].

The advantage gained by foreign competitors, particularly from Japan and South Korea, complicates Ford’s ability to compete on price and profitability. At the same time, Ford’s ongoing investments in domestic manufacturing and supply chain adjustments signal a commitment to long-term resilience and adaptation, despite the immediate headwinds [2].

References:
[1] https://finance.yahoo.com/news/ford-said-expects-trumps-tariffs-044442868.html
[2] https://americanbazaaronline.com/2025/08/01/ford-to-lose-2-billion-under-trumps-tariffs-465740/
[3] https://www.reuters.com/business/autos-transportation/ford-raises-projected-tariff-hit-results-shares-drop-3-2025-07-30/