Will Trump's Tariff Relief Drive Ford's Costs Down in 2025?

Ford Motor Company F, which builds all its heavy trucks at its Kentucky Truck Plant and Ohio Assembly Plant, praised the Trump administration’s tariff relief policies. Per Reuters, President Donald Trump is considering major tariff relief for U.S. automakers, which could substantially reduce the costs currently burdening large manufacturers.

The administration has also postponed the implementation of new 25% tariffs on heavy-duty trucks, initially scheduled for this week, while it reviews possible revisions.

Ford commended the administration’s approach to medium and heavy trucks, saying it aligns with its goal of strengthening U.S. auto manufacturing. Per Ford’s spokesperson Robyn Jackson, American autoworkers deserve a level playing field. Automakers have been grappling with higher expenses from tariffs in recent years and Ford projects its tariff-related costs could total as much as $3 billion in 2025. F carries a Zacks Rank #2 (Buy) at present. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The proposal under review would grant tariff exemptions to automakers that build vehicles domestically. This would particularly benefit companies such as Ford, Toyota, Honda, Tesla, Inc. TSLA and General Motors Company GM, all of which have high levels of U.S. production. Per Republican Senator Bernie Moreno, the initiative is intended to bolster domestic manufacturing and protect American jobs.

F’s Price Performance, Valuation and Estimates  

Ford has outperformed the Zacks Automotive-Domestic industry year to date. Its shares have gained 28.3% compared to the industry’s growth of 8%. General Motors has gained 9.2% in the same period, while Tesla grew 12.2%.

 
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.31, lower than the industry’s 3.32. General Motors is trading at a forward sales multiple of 0.31, while Tesla is trading at 14.39.

The Zacks Consensus Estimate for F’s 2025 and 2026 EPS has moved up 2 cents and 4 cents, respectively, in the past 60 days. 

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This article originally published on Zacks Investment Research (zacks.com).

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