Jim Farley says prolonged tariffs could cripple profits and raise consumer prices
Ford (F) CEO Jim Farley has issued a stark warning about the potential financial damage that steep tariff hikes could inflict on the auto industry. Speaking during a late Wednesday earnings call, Farley emphasized that prolonged 25% tariffs on imports from Canada and Mexico would erase billions in industry profits, disrupt supply chains, and lead to job losses in the U.S.
“There’s no question that tariffs at [the] 25% level from Canada and Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out,” Farley stated. “Tariffs would also mean higher prices for customers.”
Tariff Uncertainty Looms Over the Auto Sector
President Donald Trump recently agreed to a 30-day pause on the proposed 25% tariffs on Canada and Mexico, while a 10% tariff on China took effect on Tuesday. The auto industry, which accounts for 26% of U.S. imports from Mexico and 12% from Canada, could face severe disruptions if the tariffs are fully enacted, according to UBS researchers.
Farley acknowledged that a short-term tariff increase would be “manageable,” but anything beyond a few weeks would significantly hurt Ford’s financial performance. However, he remains hopeful that policymakers will support the industry rather than hinder it.
“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,” he said.
Ford Faces Financial Struggles Amid EV Losses
Farley’s comments come after a mixed 2024 for Ford. While full-year sales increased by 5%, adjusted earnings per share fell by 7%, largely due to a $5 billion operating loss in Ford’s Model e electric vehicle division.
The company’s stock fell approximately 4% to $9.61 in early Thursday trading as investors reacted to the earnings report. Meanwhile, Ford’s ticker was among the most actively watched on Yahoo Finance, trailing major artificial intelligence stocks like BigBear.ai (BBAI), Arm Holdings (ARM), and Qualcomm (QCOM).
Industry-Wide Concerns Over Tariffs
Farley’s concerns mirror those of General Motors (NYSE: GM) CEO Mary Barra, who recently cautioned that tariffs were not factored into GM’s profit outlook. GM, which relies on Mexico for highly profitable pickup truck production and electric vehicle assembly, operates five major plants in Canada and Mexico. Ford, in comparison, manufactures 12% of its products in those two countries.
As the auto industry braces for potential economic fallout, executives like Farley and Barra are urging policymakers to consider the long-term effects of tariffs on profitability, jobs, and consumer affordability.
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