The Trump administration’s tariff policies will cost Ford Motor Co. roughly $2 billion net this year, a notable jump from their estimate of $1.5 billion three months ago.
Speaking to analysts and investors July 30 after they reported second-quarter results, President and CEO Jim Farley and other Ford executives said they think Ford’s approach is the right one for a higher-tariff environment because it focuses more on domestically made trucks and more niche products.
“The latest round of tariff policies—especially the deals in Japan and Europe and potentially South Korea—makes our strategy even more compelling,” Farley said on a conference call. “Our bet is not to compete in high-volume generic segments that typically require overseas production for cost competitiveness.”
During the second, Ford wholesaled nearly 1.19 million vehicles, a 4% increase from the same period last year. Revenues climbed 5% to a record $50.2 billion but, even after adjusting for one-time charges related to a warranty action and the cancellation of an EV program, earnings before interest and taxes fell 22% to $2.1 billion—due in part to about $800 million of tariff costs.
Despite that financial hit, Farley said his team is having “very constructive conversations” with the Trump administration about the operating environment. He also said Ford still has opportunities to trim the tariff exposure in its parts purchasing but noted that its strategy of building most of its cars in the United States means it likely won’t make large changes to its model.
“These tariffs—especially the ones in Europe and Asia into the U.S.—feel kind of long-term for us,” he added. “Are they big enough to change to radically change the footprint at this point in time? It doesn’t look like it. Hard to tell. But a lot of that will have to do with the administration’s commitment to companies like Ford that committed to U.S. production.”
Among the other items discusses in Ford’s report and conference call:
Executives will on Aug. 11 unveil the first electric vehicle from its long-touted skunkworks program in California. Farley said the event, which will be held in Kentucky, “is a Model T moment for us at Ford, a chance to bring a new family of vehicles to the world that offer incredible technology, efficiency, space and features.” Ford executives have bet on the California-based skunkworks to design and engineer the company’s second generation of EVs, which they say will be cheaper and offer only a handful of models.
Ford Pro, the company’s profitable commercial-vehicle division, stands to receive more growth capital in coming years as executives adjust their spending on EVs. Farley and team promised more details on that in the future but also announced that former General Motors and Amazon executive Alicia Boler Davis will take over as president of the group on Oct. 1. The unit grew its paid subscriptions to software offerings to 757,000 this spring, a 24% increase from a year earlier, and revenues are on pace to hit nearly $70 billion this year.
Shares of Ford (Ticker: F) were up nearly 2% to $11.06 in midday trading the morning after executives published earnings. Over the past six months, they have climbed roughly 10%, which has grown the company’s market capitalization to about $44 billion.
