Automaker Ford is in deep trouble, thanks to President Donald Trump’s tariff plans. The Motor industry giant says it expects tariffs to cost it about $2 billion this year, which is more than previously expected, despite building most of its cars in America.
In 2025, Trump imposed a 25% tariff on imported vehicles and auto parts from Canada and Mexico, significantly disrupting Ford’s supply chain. Although about 80% of Ford vehicles sold in the U.S. are assembled domestically, many parts cross borders multiple times during manufacturing. Ford projected a gross cost of $3 billion due to the tariffs, but expects to mitigate approximately $1 billion through logistics adjustments such as bonded transport routes, resulting in a net $2 billion profit hit for the year. This sizable tariff burden forced Ford to suspend its full-year guidance.
READ: Ford to lose over a billion dollar, thanks to Trump’s tariffs
In the second quarter of 2025, Ford reported an $800 million tariff-related expense, which contributed to a quarterly net loss of $36 million, marking its first quarterly loss since 2023. The company revised its adjusted operating profit guidance down to $6.5–$7.5 billion, compared with previous forecasts of $7–$8.5 billion. CEO Jim Farley criticized the tariff regime, arguing it unfairly advantages Japanese and South Korean automakers, who face fewer tariffs and benefit from more efficient supply chains. Ford continues to invest in domestic manufacturing and supply chain adjustments to reduce future tariff exposure, but tariffs remain a significant headwind affecting profitability in 2025.
Reportedly, the company says it had already paid an extra $800m in duties in the three months ending in June. It also suffered losses related to cutting an electric vehicle programme.
“We see there’s a lot of upside depending on how the negotiation goes with the administration,” Jim Farley, Ford’s chief executive said.
Ford’s situation in 2025 highlights the profound impact that trade policies and tariffs can have on major industries, even for companies with strong domestic manufacturing bases. Despite assembling the majority of its vehicles in the United States, Ford’s complex, cross-border supply chains expose it to significant cost pressures when tariffs are imposed. The $2 billion net cost from the tariffs underscores how interconnected global manufacturing has become, and how protective trade measures can ripple through even well-established domestic companies.
READ: Richard Verma rejoins Ford Foundation Board of Trustees (April 28, 2025)
The tariffs have clearly created substantial financial challenges for Ford, forcing the company to revise its profit expectations and absorb losses not just from trade duties but also from strategic shifts, such as cutting back on electric vehicle investments. This illustrates the difficult balancing act companies face between adapting to changing policy landscapes and maintaining innovation and competitiveness in a rapidly evolving market.
The advantage gained by foreign competitors, particularly from Japan and South Korea, complicates Ford’s ability to compete on price and profitability. At the same time, Ford’s ongoing investments in domestic manufacturing and supply chain adjustments signal a commitment to long-term resilience and adaptation, despite the immediate headwinds.