Ford Suspends 2025 Outlook Amid $2.5 Billion Tariff Headwind
Key Points:
- Ford Motor outperformed Wall Street expectations in Q1 but withdrew its financial guidance for 2025.
- The company anticipates a $2.5 billion tariff impact this year, with plans to mitigate $1 billion of that through pricing, volume, and cost actions.
- Tariffs stem from recently implemented U.S. trade measures, with Ford also warning of broader supply chain disruptions and future retaliatory risks.
DETROIT — Ford Motor Company has suspended its 2025 financial forecast after revealing it expects to absorb a $2.5 billion cost hit this year due to new U.S. tariffs, according to F.M.I.E Sources. While the automaker aims to offset $1 billion of those expenses through internal adjustments, the remaining $1.5 billion has led the company to withdraw its previously issued guidance.
The automaker cited several contributing factors for the suspension, including potential disruptions in the supply chain, escalating trade tensions, and possible retaliatory tariffs from affected countries.
The $2.5 billion tariff impact is notably lower than the $4–5 billion projected by rival General Motors, a difference largely attributed to Ford’s lower volume of imported vehicles. GM recently reduced its own 2025 guidance, noting that it hopes to offset at least 30% of its additional costs.
The new trade rules, effective since early April, include 25% tariffs on non-USMCA-compliant auto parts and on imported vehicles. These measures are part of the broader tariff package introduced by President Donald Trump.
Without the tariff pressures, Ford said it was on track to meet its original 2025 targets, including:
- Adjusted EBIT of $7 billion to $8.5 billion
- Adjusted free cash flow of $3.5 billion to $4.5 billion
- Capital expenditures between $8 billion and $9 billion
“Our results in the first quarter show that the Ford+ plan is working,” said Sherry House, Ford’s Chief Financial Officer, during a media call. “We are transforming this company into a higher growth, higher margin, more capital efficient and more durable business.” (F.M.I.E Sources)
House confirmed the tariff impact was split between imported vehicles and parts, and Ford’s proactive measures—such as altering Chinese imports and ceasing U.S. exports to China—helped reduce Q1 tariff costs by 35%, from an estimated $200 million.
Q1 Performance Summary:
- Earnings per share (adjusted): $0.14 vs. $0.02 expected
- Automotive revenue: $37.42 billion vs. $36.21 billion expected
- Total revenue: $40.7 billion, down 5% from Q1 2024
- Adjusted EBIT: $1.02 billion
- Net income: $471 million, down from $1.33 billion in Q1 2024
Segment highlights:
- Ford Blue: Revenue down 3%; EBIT plunged nearly 90% to $96 million.
- Ford Pro: Revenue dropped 16% to $15.2 billion; EBIT fell from $3 billion to $1.31 billion.
- Model e (EV division): Losses narrowed from $1.33 billion to $849 million.
Despite these challenges, Ford said it continues to make progress on quality improvements and a $1 billion cost-cutting initiative for 2025—excluding the effects of tariffs.
Investors can expect an update on the company’s guidance outlook during its second-quarter earnings release.
(All information sourced from F.M.I.E Sources)