Ford Motor Company is grappling with a substantial financial hit in early 2025, reporting a $200 million loss attributed to tariffs introduced by former President Donald Trump. These losses, incurred during the first quarter alone, have intensified cost pressures and are expected to lead to higher vehicle prices in the coming months.
The American automaker disclosed that the trade duties—particularly a 25% tariff on imported vehicles and components—had a direct impact on its performance, contributing to a 63% year-over-year plunge in adjusted EBIT to $1 billion and a 65% drop in net income to $471 million. Despite outperforming Wall Street’s expectations for revenue and earnings per share, the company withdrew its full-year financial forecast for 2025, citing economic uncertainty and policy volatility.
The tariffs dealt a heavy blow to Ford’s core operations, especially the Ford Blue division, which produces internal combustion engine vehicles, and the commercial-focused Ford Pro division. While Ford Pro still posted $1.3 billion in adjusted earnings with an 8.6% margin, it declined from the previous quarter. Ford Blue, by contrast, saw its earnings dwindle to just $96 million with a razor-thin 0.5% margin.
Ford CFO Sheri House explained that strategic actions helped soften the tariff blow by about 35%. These included rerouting logistics, halting exports to China, and revising the supply strategy for China-built models like the Lincoln Nautilus. Remaining stock of the Nautilus will be sold domestically to avoid further tariff penalties.
Meanwhile, the Model E electric vehicle division continued to operate at a loss, though the deficit narrowed to $849 million—down from $1.33 billion in Q1 2024—thanks to a 15% boost in EV sales. This recovery was fueled by competitive pricing on the 2024 Mustang Mach-E and the launch of new electric models, including the Ford Explorer EV and Ford Capri EV in Europe.
Looking ahead, Ford projects that the total tariff-related financial impact could reach $2.5 billion for the year. After mitigation efforts, the net hit to adjusted earnings is expected to be $1.5 billion. The company anticipates a decline in overall U.S. auto sales to 15.5 million units, down 500,000 from prior forecasts, as both consumers and competitors adapt to the evolving trade landscape.
CEO Jim Farley highlighted Ford’s competitive advantage in domestic production, noting that about 80% of U.S. sales come from vehicles built within the country. Nevertheless, he acknowledged the uncertain response from rival automakers and the possibility of retaliatory tariffs.
To weather the storm, Ford is implementing cost-saving measures totaling $1 billion in 2025 (excluding tariff-related expenses), in addition to streamlining its logistics to avoid unnecessary costs.
Despite the turbulence, Ford reported record U.S. pickup truck sales for the first quarter—its strongest in two decades—and a 19% rise in dealership sales for March, driven by hybrid and EV demand. However, production delays for new models in Kentucky and Michigan led to a 7% decline in wholesale volume and a 5% revenue drop to $40.7 billion.
With mounting financial strain, Ford is signaling that price hikes for new vehicles are likely in the second half of 2025, potentially rising between 1% and 1.5%. The broader automotive industry is also under pressure, with General Motors anticipating a $5 billion hit from similar tariffs this year. In this uncertain climate, Ford is leaning on its operational agility and domestic footprint to navigate an increasingly complex trade environment.
