Ford Motor Company has pulled the plug on its financial forecast for 2025, citing a massive $2.5 billion expected hit from tariffs imposed under President Donald Trump.
The Detroit-based automaker made the announcement alongside its first-quarter earnings report, which beat Wall Street expectations but still showed signs of industry strain.
The 25% tariffs on imported vehicles and auto parts, especially those noncompliant with the United States-Mexico-Canada Agreement (USMCA), have begun to take a serious toll. These levies went into effect in early April and have forced auto manufacturers like Ford to reevaluate operations, forecasts, and long-term strategies.
Though Ford says it plans to counteract $1 billion of the tariff impact through a combination of pricing adjustments, volume strategy, and internal cost-cutting measures, that still leaves a hefty $1.5 billion blow to its 2025 bottom line. As a result, the company has suspended its forward guidance for the year, a rare and cautionary move that reflects growing uncertainty in the U.S. automotive sector.
In a media call, Ford CFO Sherry House defended the company’s decision, noting that while the Ford+ turnaround strategy remains on track, the near-term risks are simply too volatile to offer reliable projections. These risks include potential supply chain disruptions, retaliatory tariffs from trade partners, and further trade policy shifts that could arise in an election year.
“We are transforming this company into a higher growth, higher margin, more capital efficient, and more durable business,” House emphasized, highlighting progress despite external headwinds.
Without the tariffs, Ford said it was on track to meet its original 2025 guidance:
- Adjusted EBIT: $7 billion to $8.5 billion
- Adjusted Free Cash Flow: $3.5 billion to $4.5 billion
- Capital Expenditures: $8 billion to $9 billion
However, that trajectory has changed significantly due to the trade policy environment. And Ford isn’t the only one feeling the heat, General Motors recently revised its 2025 outlook downward too, estimating a $4 billion to $5 billion tariff hit. Though GM imports more vehicles than Ford, it says it expects to offset about 30% of those costs.
In the first quarter of 2025, Ford reported:
- Earnings Per Share (EPS): 14 cents adjusted (vs. 2 cents expected)
- Automotive Revenue: $37.42 billion (vs. $36.21 billion expected)
- Total Revenue: $40.7 billion (down 5% YoY)
- Adjusted EBIT: $1.02 billion
- Net Income: $471 million
That compares to the same quarter in 2024, when Ford pulled in $42.8 billion in revenue and earned $1.33 billion in net income. Last year’s adjusted EBIT was a much higher $2.76 billion, showing a significant year-over-year slide.
Ford’s operational breakdown for Q1 2025 also reveals deeper issues:
- Ford Blue (traditional operations): Revenue fell 3%, and EBIT plunged nearly 90% to $96 million.
- Ford Pro (commercial): Revenue dropped 16% to $15.2 billion; EBIT fell from over $3 billion to $1.31 billion.
- Model e (electric vehicles): Losses narrowed to $849 million from $1.33 billion in Q1 2024.
Although Ford hasn’t officially announced major shifts to its North American production footprint, it has taken a number of measures to mitigate tariff costs. These include halting U.S. exports to China, restructuring China-bound imports, and tweaking logistical operations. Such adjustments reduced its Q1 tariff burden, initially around $200 million, by roughly 35%.
Still, even with these countermeasures, the broader environment remains challenging. U.S. industry sales are now projected at 15.5 million units for the year, down half a million from earlier expectations. This slide in projected demand adds yet another variable to the growing list of concerns facing automakers in 2025.
In terms of cost savings, Ford reiterated that it is committed to a $1 billion internal cost reduction this year, unrelated to tariffs. The company has made progress on quality improvements and structural efficiencies, but rising global tensions and protectionist policies are undermining these gains.
Investors will be watching closely as Ford plans to revisit and possibly reinstate its 2025 guidance during its second-quarter earnings call. Until then, uncertainty reigns.
As the U.S. automotive industry braces for the long-term effects of Trump-era tariffs, companies like Ford are caught between political forces and economic realities. The fallout could determine not just profit margins but the competitive edge of American automakers in a volatile global market.
