Ford's Tariff Disadvantage Despite Domestic Production

Ford is facing a disadvantage despite making 80% of its vehicles in the US due to the Trump administration's trade deals with Japan, the EU, and South Korea. The company is facing steeper tariffs on parts and imported aluminum, putting it at a disadvantage compared to foreign rivals.

Ford Motor Company, a longstanding titan of the American automotive industry, is currently grappling with significant financial challenges due to the Trump administration's trade policies. The company's recent financial reports indicate that tariffs imposed on imported vehicles and auto parts, particularly from Canada and Mexico, have led to substantial cost increases, disrupting Ford's supply chain and impacting its profitability.

According to Ford's latest financial statements, the company expects tariffs to cost it approximately $2 billion in 2025. This cost is higher than previously anticipated, despite the fact that about 80% of Ford vehicles sold in the U.S. are assembled domestically [1]. The complex, cross-border nature of Ford's supply chain, where many parts cross borders multiple times during manufacturing, makes it particularly vulnerable to tariffs.

In the second quarter of 2025, Ford reported an $800 million tariff-related expense, contributing to a quarterly net loss of $36 million. This marked the company's first quarterly loss since 2023. Ford's CEO, Jim Farley, criticized the tariff regime, arguing that it unfairly advantages Japanese and South Korean automakers, who face fewer tariffs and benefit from more efficient supply chains [1].

The tariffs have also forced Ford to revise its profit expectations and absorb losses not just from trade duties but also from strategic shifts, such as cutting back on electric vehicle investments. Ford's ongoing investments in domestic manufacturing and supply chain adjustments signal a commitment to long-term resilience and adaptation, despite the immediate headwinds.

The situation highlights the profound impact that trade policies and tariffs can have on major industries, even for companies with strong domestic manufacturing bases. 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.

References:
[1] https://americanbazaaronline.com/2025/08/01/ford-to-lose-2-billion-under-trumps-tariffs-465740/