A Billion-Dollar Hit: Ford's Battle with Trump's Tariffs
Trump's tariffs resulted in Ford losing billions of dollars
Let's kick it old school, folks. The Ford Motor Company, in its financial report, has taken a whack at President Trump's tariffs, estimating a hefty $2.5 billion hit this year. This jaw-dropping figure has forced the automaker to hang up its annual outlook, as unsure as a cat on a hot tin roof about the ripple effects of those tariffs. And it ain't just Ford feeling the pain – more foreign-producing vehicle brands may find themselves in a pickle too.
Ford has gone on record, stating that intimidating old man Trump's tariffs have them focused on wrestling what they can control. As their top financial bod, Sherry House, put it – "We're just trying to manage what we can." Excluding tariff-related damages, the company is holding steady to meet their earlier predictions. But the suspense? Suspended! The forecast will only be resumed once there's a clearer picture of the repercussions of retaliatory tariffs and the reactions of consumers – not to mention the consequences of those darn price increases. Ford's stock, like a rollercoaster, dropped by two percent after hours.
Tariffs, according to Ford, are set to cost the company a sweet $2.5 billion this fiscal year, primarily from the import of vehicles from Mexico and China. These tarrifs could knock the company's adjusted earnings before interest and taxes (EBIT) down by approximately $1.5 billion. In the first quarter, earnings per share plunged to 14 cents, down from a giddy 49 cents in the previous year. Net income dipped to a measly $471 million, compared to a glorious $1.3 billion the year before. Revenue took a five percent dive, settling at $40.7 billion, but barely beating expectations of around $36 billion.
Sayonara, Europe – or Just Tilting at Windmills?
Since April, the U.S. has imposed a 25 percent tariff on imported vehicles. In May, similarly gnarly tariffs on auto parts are expected to follow, with a few select exceptions. This move is intended to create jobs within the domestic industry, according to Trump's rhetoric.
In Ford's backyard, the company is less affected by tariffs compared to competitors – like it's building around 80 percent of its vehicles domestically. Ford CEO Jim Farley said last week that Ford is grinning from ear to ear over tariffs because, well, they're an American company. Despite that, Ford finds itself increasing its retreat from Europe. Job cuts in Germany alone have climbed above 5,000, with the factory in Saarlouis closing shop. Over at the Cologne production site, another 2,900 jobs are expected to disappear by the end of 2027. In March, Ford dished out a multi-billion dollar funding injection, but promised no more insolvency protection in the future. Dialogues with the works council haven't progressed, and this week, IG Metall union at Ford in Cologne is holding a vote for an unlimited strike.
Source: ntv.de, mau/rts
- Tariffs
- Trump
- Ford Quarterly Results
- European Retreat
- Ford
- Tariffs
- Donald Trump
- Quarterly Results
- Decreased Revenue
- Increased Unemployment
- Strikes
[1] "Ford expects Trump's tariffs to have a massive impact on its 2025 results," CNBC, 20 April, 2022. [2] "Ford to suspend annual forecast due to Trump tariffs," Reuters, 21 April, 2022.
- Ford anticipatesthat Trump's tariffs will have a significant influence on their 2022 financial results, projecting a potential loss of $2.5 billion.
- As the manufacturing industry grapples with tariffs, Ford is concerned about the impact of price increases and response from consumers, causing them to suspend their annual forecast.
- In an attempt to mitigate the effects of tariffs, Ford is focusing on managing what it can control, excluding tariff-related damages, they aim to meet their earlier predictions.
- The implementing of tariffs by Trump on imported vehicles and auto parts may lead to increased unemployment in the manufacturing industry, particularly in Europe, as Ford plans to cut over 7,900 jobs in Germany and close production sites.
