On May 6, 2025, Ford Motor Company (Ford) announced that it expects to face a loss of approximately $1.5 billion in 2025 as a result of the U.S. government’s latest tariff policy, and has suspended its full-year financial guidance as a result. The decision highlights the far-reaching impact of global trade policy changes on the automotive manufacturing industry.
Tariff Impact and Financial Adjustments
In its latest financial report, Ford noted that it expects to incur approximately $2.5 billion in additional costs in 2025 as a result of the tariff policy, of which it has managed to offset approximately $1 billion through supply chain adjustments and operational optimization measures, for a net impact of $1.5 billion. Sherry House, the company’s chief financial officer, said, “Our team has taken several steps to minimize the impact of the tariffs on our business.”
Ford decided to suspend its 2025 financial guidance due to the uncertainty caused by the tariffs. The company had expected full-year adjusted earnings before interest and taxes (EBIT) to be between $7 billion and $8.5 billion, but it is now difficult to accurately predict full-year results. Ford plans to update its financial expectations based on changes in the economic and policy environment when it reports its second-quarter earnings.
First Quarter Results Overview
Despite the challenges, Ford achieved revenue of $40.7 billion in the first quarter of 2025, exceeding market expectations but down 5 percent year-over-year. Net income was $471 million, down 65% year-over-year. Adjusted earnings per share came in at $0.14, better than analysts’ expectations of $0.04. The company said the revenue decline was primarily impacted by capacity adjustments and supply chain disruptions during new model launches.
Performance by Business Segment
- Ford Pro (Commercial Vehicles segment): adjusted EBITDA was $1.31 billion, down sharply from $3.0 billion in the year-ago period, primarily driven by plant shutdowns and fleet pricing pressures.
- Ford Blue (Traditional Fuel Vehicles division): adjusted EBITDA was $96 million, down sharply from $900 million a year ago, reflecting the impact of supply chain pressures and higher tariff costs.
- Model e (EV division): loss narrowed to $849 million, an improvement from $1.3 billion in the same period last year, benefiting from cost controls and volume growth.
Response Strategies and Future Outlook
To address the challenges posed by the tariffs, Ford is taking several measures, including adjusting its supply chain layout, increasing the proportion of localized production, and exploring new market opportunities. The company plans to invest $10 billion from 2026 onwards to enhance its local manufacturing capabilities in the US to reduce its dependence on imported parts. In addition, Ford is working with government agencies to gain more flexibility and support on tariff policies. Through these efforts, the company hopes to mitigate the negative impact of tariffs on its business and remain competitive in the market.
Notably, Ford’s stock price fell in response to the news, dropping more than 4% at one point during the day’s trading. The market is generally concerned that the cost of tariffs will directly erode the company’s profit margins and even affect the advancing electric vehicle strategy and new model launch plans. Several investment banks have begun to lower Ford’s target share price, and recommended that investors “cautiously wait and see”. At the same time, some consumers have also expressed concern that the price of future models may rise if cost pressures continue to trickle down to the end user.
Industry Impact and Analysis
Ford’s situation is not an isolated case. The downward trend in the auto industry as a whole is clear, and other automakers such as General Motors and Stellantis are facing similar challenges as a result of the tariff policy. General Motors is expected to face a loss of $4 billion to $5 billion as a result of the tariff policy. Analysts point out that the current trade policy changes could have a far-reaching impact on the supply chain, cost structure, and market layout of the entire automotive industry.
Against the backdrop of increased global economic uncertainty, automakers need to be more flexible in adjusting their strategies to cope with the changing policy environment. Ford’s response and future planning will provide a useful reference for other enterprises.
Conclusion
Ford Motor Company expects to face a $1.5 billion loss in 2025 due to tariff policy adjustments and has suspended its full-year financial guidance. The company is proactively responding to the challenge by adjusting its supply chain and increasing localized production. Against the backdrop of changing global trade policies, Ford’s response strategy will have a significant impact on the entire automotive industry.
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