Ford (F) CEO Jim Farley has a message for the Trump administration: Our profits will be run over if you hit the world with tariff hikes.
“There’s no question that tariffs at [the] 25% level from Canada, Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out and adverse effect on the US jobs as well as the entire value system in our industry. Tariffs would also mean higher prices for customers,” Farley said on a late Wednesday earnings call.
President Donald Trump agreed to a 30-day pause on 25% tariffs on Canada and Mexico on Monday, while a 10% tariff on China kicked in on Tuesday.
The tariffs could inject chaos into auto supply chains, experts say. The auto industry accounts for 26% of imports from Mexico to the US and 12% from Canada, UBS researchers estimated.
Farley believes tariffs for a few weeks would be “manageable,” but after that, they would be painful to the company’s top and bottom lines.
“We believe, based on our conversations in D.C. with the Trump administration and congressional leaders, that they are committed to strengthening, not weakening our nation’s auto industry,” Farley said. “That is certainly our expectation. And we look forward to working with our leaders to make sure that that becomes a reality. Because they understand and appreciate how vital our industry is to jobs, the economy, our national security, and the communities across our country.”
Read more: What are tariffs, and how do they affect you?
Farley’s blunt views on tariffs come on the heels of a mixed 2024.
While full-year sales rose 5% from the prior year, adjusted earnings per share dropped 7%. The company was weighed down in large part by a $5 billion operating loss at its Model e electric vehicle division.
Ford’s share price fell around 4% to $9.61 in early Thursday trading as investors digested a lackluster quarter from the auto giant. The company’s ticker page was the fifth most active on Yahoo Finance at last check, trailing artificial intelligence plays such as BigBear.ai (BBAI), Arm Holdings (ARM), and Qualcomm (QCOM).
The Ford CEO’s comments echo the warning from General Motors (GM) chair and CEO Mary Barra on Yahoo Finance following its latest earnings report. GM’s profit outlook unnerved the Street as it didn’t bake in the impact of tariffs.
GM produces highly profitable pickup trucks in Mexico and relies on plants there to make EVs such as the Chevy Blazer and Cadillac Optiq. It has five large assembly plants in Canada and Mexico. Ford manufactures 12% of its products in the two countries.
