Jim Farley, the chief executive of Ford Motor Co. (NYSE:F), is worried that tariffs proposed by President Trump could cause more harm to US automakers than good.
He argued that raising tariffs on China, Mexico and Canada would put American automakers in a worse position than their foreign competitors like Toyota and Hyundai.
Ford’s fiscal fourth quarter came out ahead of the Street estimate on Wednesday.
The company shares are down by about 5.0%, but this is because the management has been preparing for an uncertain year.
Ford could lose billions of dollars due to Trump’s tariffs
Farley believes that 25% tariffs (if implemented) on products from Canada and Mexico will cost his company “billions of billions” in profit, and could lead to job losses and increased prices for customers.
Toyota and Hyundai can continue to import vehicles at low or no duty from Korea and Japan.
Overall, Trump’s tariffs create an unfair playing field that gives foreign automakers a significant competitive edge over their American competitors, said Mr. He.
Farley called for the Trump administration adopting a comprehensive and fair tariff approach, which does not penalize unfairly US companies that have significant operations in North America.
Millions of cars are coming to our country and aren’t being subjected to tariffs. Tariffs should be applied to all vehicles entering our country.
Ford Q4 Earnings: Model e Loses Over $5 Billion
Farley’s remarks come at a moment when Ford faces several challenges, including the profitability of “Model e” and the costlier introduction of new models.
The EV division of the legacy automaker will lose more than $5 billion by 2024. This includes $1.39 billion during the last quarter.
Ford’s adjusted earnings before taxes and interest (EBIT), which were $10.2 billion in 2024, are expected to drop between $7 and $8 billion this year.
Ford is already under pressure from the challenges it faces, but the tariff uncertainty adds further to this.
Ford shares remain attractive to income investors, as they currently pay a 5.99% dividend yield.
Trump Tariffs are the Same for GM Stellantis
Investors need to be aware that Trump’s tariffs may also affect other automakers in the country, such as General Motors or Stellantis.
The cost of these companies’ supply chains and possible disruptions will likely increase, leading to higher prices for the consumers.
Some automakers have already considered shifting their production from the US to other countries in order to minimize the negative impact of tariffs.
The big three – Ford, GM and Stellantis – have all been on a downward trend since election day (6th November).
The post Trump Tariffs Put US Automakers at a Disadvantage, Warns Ford CEO could be updated as new information becomes available
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