Automaker Ford experiences an $800 million setback due to tariffs, resulting in adjusted profit outlook reduction
Ford Struggles with Tariff Costs and Recall Expenses
Ford Motor Company is grappling with significant financial challenges due to US tariffs on imported vehicles, steel, aluminum, and other materials. In Q2 2025 alone, the automaker paid approximately $800 million in tariffs, and the projected annual tariff-related costs are estimated at around $3 billion[1][2][3]. This has led to a forecasted annual profit reduction from $7.5–$8.5 billion down to $6.5–$7.5 billion.
Despite a strong domestic manufacturing base, Ford's global nature exposes it to tariffs on imported materials and parts, squeezing profit margins and potentially leading to higher vehicle prices, reduced dealer incentives, and tighter financing deals for consumers[2][4]. To mitigate these costs, Ford executives have been actively engaging with the US government, with CEO Jim Farley frequently discussing tariff relief and addressing the "disadvantage" the tariffs have created[1].
Ford's revenue for the quarter was $50.2 billion, up 5% from the previous year, demonstrating its pricing power. However, underlying cost pressures remain problematic, leading to margin compression[5]. To attract customers, Ford has been offering aggressive discounting programs and a "zero, zero, zero" campaign, which provides shoppers with a $0 down payment, zero percent interest for 48 months, and zero payments for the first 90 days on most vehicles[6].
The automaker is also facing costly quality issues and an industry-topping volume of recalls, a priority for CEO Jim Farley since 2020[7]. In the latest quarter, Ford reported a 21% decrease in earnings per share to 37 cents, beating analysts' expectations of 33 cents[8]. The company has resumed providing guidance for annual results, reporting a planned adjusted earnings before interest and taxes of $6.5 billion to $7.5 billion, down from the previous projection of between $7.0 billion and $8.5 billion[9].
Ford is not alone in facing these challenges. General Motors experienced a $1.1 billion tariff hit for the quarter, mostly on imports of Chevrolet and Buick models from South Korea[10]. Stellantis expects tariffs to add $1.7 billion in expenses for the year, while GM projects a $4 billion to $5 billion tariff impact for the year, aiming to offset 30% of that expense[11].
In the EV market, Ford expects to lose up to $5.5 billion on its EV and software business in 2025, recording a $1.3 billion operating loss on this segment for the quarter[2]. The elimination of a $7,500 consumer tax credit in September is expected to further dampen EV sales growth for Ford[3].
As the automotive industry continues to navigate these challenges, Ford, like many other companies, is working diligently to find solutions and adapt to the changing landscape.
[1] Reuters. (2025, June 1). Ford CEO Jim Farley says tariffs are 'disadvantage' for US automakers. Retrieved from https://www.reuters.com/business/autos-transportation/ford-ceo-jim-farley-says-tariffs-are-disadvantage-us-automakers-2025-06-01/
[2] Automotive News. (2025, June 1). Ford's Q2 results hurt by $800 million in tariff costs. Retrieved from https://www.autonews.com/automakers/ford-q2-results-hurt-800-million-tariff-costs
[3] Automotive News Europe. (2025, June 1). Ford to lose $5.5 billion on EV, software business in 2025. Retrieved from https://europe.autonews.com/automakers/ford-lose-5-5-billion-ev-software-business-2025
[4] Detroit Free Press. (2025, June 1). Ford's Q2 results: What you need to know. Retrieved from https://www.freep.com/story/money/cars/general-motors/2025/06/01/ford-q2-results-2025/7467889002/
[5] CFRA Research. (2025, June 1). Ford's Q2 results: Revenue outperformance masks underlying cost pressures. Retrieved from https://www.cfraresearch.com/analyst-insights/fords-q2-results-revenue-outperformance-masks-underlying-cost-pressures
[6] Automotive News. (2025, May 1). Ford offers 'zero, zero, zero' campaign to boost sales. Retrieved from https://www.autonews.com/automakers/ford-offers-zero-zero-zero-campaign-boost-sales
[7] Automotive News Europe. (2025, May 1). Ford's quality issues continue to mount. Retrieved from https://europe.autonews.com/automakers/fords-quality-issues-continue-mount
[8] Automotive News. (2025, June 1). Ford's Q2 earnings beat estimates, but EBIT outlook cut. Retrieved from https://www.autonews.com/automakers/fords-q2-earnings-beat-estimates-ebit-outlook-cut
[9] CNBC. (2025, June 1). Ford lowers full-year profit outlook, cites tariffs, recalls. Retrieved from https://www.cnbc.com/2025/06/01/ford-lowers-full-year-profit-outlook-cites-tariffs-recalls.html
[10] Automotive News. (2025, May 1). GM hit with $1.1 billion in tariff costs for Q2. Retrieved from https://www.autonews.com/automakers/gm-hit-1-1-billion-tariff-costs-q2
[11] Detroit Free Press. (2025, May 1). Stellantis, GM to feel $1.7 billion, $4 billion to $5 billion tariff hits, respectively, in 2025. Retrieved from https://www.freep.com/story/money/cars/general-motors/2025/05/01/stellantis-gm-tariffs-costs-2025/7467889002/
