Jamie Spencer
Ford Motor exceeded Wall Street’s first-quarter expectations but suspended its 2025 financial guidance due to expected $2.5 billion in tariff-related costs, a move prompted by the ongoing impact of President Donald Trump’s tariffs. The Detroit automaker projects to offset a portion of these costs but remains cautious about future supply chain disruptions and potential increases in tariffs.
Ford’s Tariff Impact and Supply Chain Concerns
Ford expects to mitigate $1 billion of the $2.5 billion impact from tariffs through remediation actions, pricing, and volume adjustments, bringing the total expected tariff impact for 2025 to $1.5 billion. The company highlighted the risk of future tariffs and supply chain disruptions as factors contributing to its decision to withdraw the 2025 financial guidance. Ford’s approach contrasts with General Motors’ expected $4 to $5 billion tariff impact.
Effects of New Tariffs on Ford’s Production
The 25% tariffs on imported vehicles and auto parts, which came into effect in early April, are straining the automotive industry. Ford anticipates a decrease in U.S. industry sales to 15.5 million units, down by 500,000 from prior expectations. The company has taken measures to reduce tariff costs, including halting U.S. exports to China and adjusting its China-made imports, reducing the first-quarter tariff impact by 35%.
Ford’s First-Quarter Performance
Ford reported strong earnings, exceeding analyst expectations. Earnings per share came in at 14 cents, far surpassing the 2 cents expected. Automotive revenue reached $37.42 billion, beating the expected $36.21 billion. However, the company saw a 5% decline in total revenue year-over-year, reporting $40.7 billion for the first quarter, down from $42.8 billion a year earlier.
Ford’s Segment Performance and Outlook
Ford’s traditional “Blue” operations saw a 3% revenue decline, but a nearly 90% drop in EBIT, which fell to $96 million. The company’s “Pro” commercial business experienced a 16% revenue drop and a significant decline in EBIT results. Ford’s electric vehicle segment, “Model e,” reduced losses from $1.33 billion to $849 million, marking progress in its shift to electric vehicles. Ford is also making strides in quality improvements and cost reductions, excluding the impact of tariffs.
Ford will update investors on its 2025 guidance status when it reports second-quarter results later this year.
