Trump’s tariffs hit FoMoCo’s bottom line

FORD Motor Company posted a 65 per cent drop in first quarter net income and withdrew its full-year earnings forecast, saying it expects US import tariffs to reduce profits by $US1.5 billion ($A2.3b) in 2025.

As reported by Automotive News, the Blue Oval brand expects a gross impact of $US2.5 billion ($A3.9b), but that it will mitigate that hit with $US1.0 billion ($A1.5b) in offsets.

Ford’s estimated tariff exposure is significantly lower than the projected $US4.0 billion ($A6.2b) projected by rival General Motors, which builds a larger percentage of its line-up outside of the United States.

Ford Motor Company chief financial officer Sherry House said the Trump administration’s tariffs had cost the company an estimated $US200 million ($A309.5m) in the first quarter of 2025.

She said Ford was able to lower that impact by approximately 35 per cent with strategies such as using bonded carriers to transport vehicles and parts to Canada from Mexico so they would not be taxed while transiting through the United States.

Ford chief executive officer Jim Farley told Automotive News that FoMoCo adjusted earnings before interest and taxes fell 63.0 per cent to $US1.0 billion ($A1.5b), and revenue was down five per cent to $US40.7 billion ($A62.9b).

Net income was $US471 million ($A728.8m) for the Detroit-based manufacturer, which blamed the declines on plant downtime, mostly related to a redesign of the Expedition and Lincoln Navigator SUVs, while arguing that the fundamentals of its business remain strong.

“We are strengthening our underlying business with significantly better quality and our third straight quarter of year-over-year cost improvement, excluding the impact of tariffs,” said Mr Farley.

“Ford Pro, our largest competitive advantage, is off to a strong start to the year, gaining market share in the most profitable US and European customer segments.”

The Ford Pro commercial unit made $US1.3 billion ($A2.0b) in the first quarter of 2025, down 56 per cent year-on-year because of lower wholesales and fleet pricing. Overall revenue from Ford Pro fell 16 per cent to $US15.2 billion ($A23.5b).

Meanwhile, the Ford Blue internal combustion unit made $US96.0 million ($A148.6m), down 89 per cent, as revenue fell three per cent to $US21.0 billion ($A32.5b), while Ford Model e, the manufacturer’s electric vehicle operations, lost $US849.0 million ($A1.3b), an improvement on the $US1.3 billion ($A2.0b) lost in the same period last year.

US retail sales of Ford’s electric vehicles rose 15 per cent across the year’s first quarter.

Ford said the result is likely to be Model e’s strongest quarterly result for 2025, indicating that the potential for future or in increased tariffs in the United States may impact electric vehicle profits.

“Given material near-term risks, especially the potential for industrywide supply chain disruption impacting production, the potential for future or increased tariffs in the US, changes in the implementation of tariffs including tariff offsets, retaliatory tariffs and other restrictions by other governments and the potential related market impacts, and finally policy uncertainties associated with tax and emissions policy, the company is suspending guidance,” said Ford in a statement.

“These are substantial industry risks, which could have significant impacts on financial results, and that make updating full year guidance challenging right now given the potential range of outcomes.”

Ford chief operating officer Kumar Galhotra said the company had not seen any supply chain disruption yet but noted the uncertainty around rare-earth materials imported from China, saying it could take “only a few parts” being affected to cause production disruptions.

For the full year, Ford expects US light-vehicle sales to reach 15.5 million units, down by about 500,000 from its original projections.

It expects industry pricing to rise 1.0 to 1.5 per cent in the second half of the year because of the Trump administration’s tariffs.