Trump's tariff policies have increased Ford car prices, and CEO Farley says this will affect billions of dollars.

Taiwan • Business • 05/07 22:32
Trump's tariff policies have increased Ford car prices, and CEO Farley says this will affect billions of dollars.

The administration of former U.S. President Trump reimposed high tariffs on imported cars and components, leading Ford Motor Company to increase the prices of three models produced in Mexico starting May 2, including the Mustang Mach-E, Maverick, and Bronco Sport. Ford CEO Jim Farley stated that the tariffs would have a multi-billion dollar impact on the company's operations and disrupt global supply chains and influence trade policies. Ford estimates that its adjusted earnings before interest and taxes (EBIT) in 2025 will decrease by about $1.5 billion and has suspended its full-year profit guidance to address economic uncertainties due to the tariffs.

Key Updates

05/08 19:02

Shanghai launches ten major initiatives to optimize the business environment and help small and medium-sized enterprises tackle the challenges of the trade war.

In May 2025, the Shanghai Municipal Government launched the "Ten Major Breakthrough Initiatives" as an extension of the Business Environment Optimization 8.0 initiative to tackle the US-China tariff war and economic uncertainties. This policy focuses on reducing administrative intervention, improving regulatory transparency, and supporting small and medium-sized enterprises. It aims to ease the burden on businesses with measures like "no unnecessary interference" and "exemption from penalties for minor offenses," addressing the needs of foreign-invested enterprises and sustaining market vitality and institutional resilience.

05/08 12:31

U.S. Commerce Secretary Howard Lutnick's economic commentary is inconsistent: inconsistent stances on manufacturing and trade policies

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05/08 09:02

U.S. Temporarily Halts 37% Duty on Bangladeshi Apparel: Yunus Appeals to Trump for Leniency, Fate of 4 Million Workers Hangs in the Balance

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Trump's tariff policy has severely impacted the confidence of Japanese businesses, yet the tourism industry has achieved its second-highest record ever, despite the challenging conditions.

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05/07 22:32

Trump's tariff policies have increased Ford car prices, and CEO Farley says this will affect billions of dollars.

The administration of former U.S. President Trump reimposed high tariffs on imported cars and components, leading Ford Motor Company to increase the prices of three models produced in Mexico starting May 2, including the Mustang Mach-E, Maverick, and Bronco Sport. Ford CEO Jim Farley stated that the tariffs would have a multi-billion dollar impact on the company's operations and disrupt global supply chains and influence trade policies. Ford estimates that its adjusted earnings before interest and taxes (EBIT) in 2025 will decrease by about $1.5 billion and has suspended its full-year profit guidance to address economic uncertainties due to the tariffs.

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Background of Tariff Policy

In March 2025, Trump's administration announced a 25% import tariff on all complete vehicles assembled overseas and additional taxes on imported automotive components. This policy aims to encourage the return of automobile manufacturing to the United States but has also sparked widespread concern and backlash in the automotive industry. According to Ford's estimates, these tariffs will increase its operating costs by about $2.5 billion in 2025, including $1 billion related to duty-free transportation.

Ford stated that these tariffs would result in additional costs of up to $5,000 or more per imported vehicle. CEO Farley pointed out that relocating all production stages back to the U.S. would significantly increase vehicle prices, thereby affecting consumers' purchasing power.

Ford's Price Increase Response

Facing tariff pressure, Ford notified dealers in early May that it would increase the prices of three models produced in Mexico starting May 2: the Mustang Mach-E electric SUV, the Maverick small pickup truck, and the Bronco Sport SUV. According to a dealer notice obtained by Reuters, some models will see price increases of up to $2,000.

A Ford spokesperson stated that this price adjustment is a "mid-year price adjustment routine" and a "combined result of facing tariff impacts," emphasizing that the company has not fully passed on all tariff costs to consumers. These increases apply only to vehicles produced after May 2, which are expected to arrive at U.S. dealerships by the end of June.

Impact of Tariffs on Operations and Financial Reports

Despite Ford's first-quarter 2025 financial performance exceeding market expectations, with adjusted earnings per share at 14 cents, far above analysts' estimated loss of 4 cents per share, and total revenue reaching $40.7 billion, the company still revised its full-year financial forecast downward due to tariff policies. Ford estimates that tariffs alone will reduce its 2025 pre-tax earnings by about $1.5 billion.

Ford also announced in its latest financial report that it would suspend providing full-year profit forecasts due to economic uncertainty brought by tariff policies. Farley stated in an analyst conference call that excluding tariff factors, the company's core business remains within the originally estimated operating range.

Market and Industry Reactions

Ford is not the only automaker affected. General Motors (GM) also warned that tariffs could impact its operations by billions of dollars and has revised its full-year financial forecast downward. Overall, the Trump administration's tariff policy has significantly disrupted the global automotive supply chain, with major European and American automakers adjusting production capacity, revising financial forecasts, and even temporarily halting some factory operations.

According to estimates by Anderson Economic Group, the cost of tariffs on imported vehicles could increase car prices by $2,000 to $12,000, depending on the model. This is particularly evident for models primarily competing on price, like the Ford Maverick small pickup truck.

Ford's Response Strategy and Future Outlook

In response to the cost pressures brought by tariffs, Ford stated it would continue to evaluate supply chain and production strategies, including whether to relocate the assembly of some models from Mexico back to the U.S. However, Farley also admitted that completely moving production back to the U.S. would make vehicle prices unaffordable for the average consumer.

Ford promised to provide updated performance guidance in the second-quarter analyst conference call and continue to monitor the impact of policy changes on operations. The company emphasized that it would seek a balance between safeguarding consumer interests and maintaining corporate competitiveness.

References

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