Ford Revises 2025 Forecast and Q1 Profits Amid Trump Tariff Impact

Automobile giant Ford has reported a staggering 65% drop in its first-quarter profits, prompting the company to withdraw its 2025 financial forecast amid ongoing tariff uncertainties. The automaker posted a profit of $471 million, which, while surpassing analyst expectations, represents only a third of its earnings from the same period last year. Additionally, Ford’s revenues fell by 5% to $40.7 billion, reflecting a challenging landscape for the company as it navigates new vehicle launches and production slowdowns.

Profit Decline and Revenue Challenges

Ford’s significant profit decline is attributed to a 7% drop in wholesale units, a decrease the company had previously anticipated. This downturn is largely due to slower production at its Kentucky and Michigan plants, where new vehicle models are being introduced. The company is now facing an estimated $1.5 billion annual hit to its adjusted operating earnings as a result of tariffs imposed on imported vehicles, steel, aluminum, and auto parts. These tariffs have affected many companies since the return of former President Trump to the White House in January. Despite efforts to mitigate the impact, such as shifting vehicle shipments from Mexico to Canada, Ford expects the total tariff-related costs to reach $2.5 billion, although supply chain adjustments have already helped reduce this figure by $1 billion.

Divisional Performance and Market Strategies

Ford’s various divisions have also felt the strain of the current market conditions. The “Pro” division, which focuses on fleet and commercial buyers, and the “Blue” division, which encompasses traditional petrol and diesel models, both experienced profit declines. However, the electric vehicle segment has seen a narrowing of losses, indicating a potential area of growth for the company. Chief Executive Jim Farley emphasized that Ford remains “very aggressive” in the market, extending employee pricing promotions to stimulate retail sales. This strategy has shown some success, with an uptick in sales reported in April. Nevertheless, Farley cautioned that consumers may face rising prices later this year as the effects of tariffs begin to filter through.

Future Outlook and Industry Concerns

Looking ahead, Ford anticipates that its full-year sales will remain flat or increase by only about 1%. Chief Financial Officer Sherry House acknowledged the possibility of a “potential compression” in sales during the latter half of 2025. Despite these challenges, Ford described its underlying business as “strong,” aligning with previous projections of adjusted operating earnings between $7 billion and $8.5 billion, excluding tariff impacts. However, the company is also grappling with concerns over potential changes to U.S. emissions policies and restrictions imposed by China on rare earth elements, which are crucial for auto manufacturing. Chief Operating Officer Kumar Galhotra warned that these factors could disrupt production for Ford and its competitors, potentially leading to shifts in pricing strategies across the automotive sector.

Market Reaction and Stock Performance

Following the announcement of its financial results, Ford’s shares fell by 2.3% in after-hours trading. This decline reflects investor concerns about the company’s ability to navigate the current economic landscape and the ongoing challenges posed by tariffs and production slowdowns. As Ford continues to adapt to these pressures, the company’s strategies and performance will be closely monitored by analysts and investors alike.

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