Will U.S. Tariffs and Emission Policies Boost Ford's Edge?

Ford F sees recent U.S. tariff and emissions policy changes as an advantage for its American operations and profitability.

CEO Jim Farley highlighted on Ford’s Q3 earnings call that the tariff rules under Trump’s presidency favor automakers that build most of their vehicles in the United States. That’s a clear advantage for Ford. The company expects to benefit from credits tied to its large domestic production, which will help offset tariffs on imported parts. Ford now expects $1 billion tariff hit for 2025, down from $2 billion guided previously. That $1 billion swing is likely to ease the impact of the Novelis aluminum supply disruption.

The new policy also benefits Ford’s truck business. Tariffs on imported medium and heavy-duty trucks now “level the playing field,” allowing Ford to compete more effectively since all its Super Duty models are built in the United States. With pickup trucks being Ford’s profit engine, this shift gives the company an edge over foreign-built rivals.

On the regulatory front, Ford anticipates relief from strict tailpipe emissions standards by year-end. Federal policies have already scaled back California’s zero-emission vehicle (ZEV) rules, and broader easing of federal targets may follow next year. That would reduce the need to buy costly compliance credits. CFO Sherry House noted that Ford’s $2.5 billion in credit purchase obligations could largely disappear, removing a major expense line from its books. Because of the ease of emission regulations, the company is nowadjusting its product mix accordingly — scaling back some EV plans or shifting the balance toward profitable gas/hybrid models.

Overall, the latest policy shifts appear to strengthen Ford’s competitive position, supporting its strategy to build where it sells and maintain a strong U.S. manufacturing footprint. And relaxed emission targets provide Ford more flexibility to align its product mix with market demand.

Competitive Context

General Motors GM expects a smaller financial hit from U.S. tariffs than previously forecast. The company now projects the impact to range between $3.5 billion and $4.5 billion, compared with an earlier estimate of $4 billion to $5 billion, citing anticipated tariff relief measures.

Stellantis STLA, too, has trimmed its outlook. The automaker now sees U.S. tariffs costing around €1 billion in 2025, down from its prior estimate of €1-€1.5 billion.

Both revisions suggest that easing trade policies is starting to lighten the burden for major automakers operating in the U.S. market.

The Zacks Rundown for Ford

Shares of Ford have gained 33% year to date, outperforming the industry. General Motors has risen 29%, while Stellantis has lost roughly 23% over the same period.

From a valuation standpoint, F trades at a forward price-to-sales ratio of 0.32, below the industry average. It carries a Value Score of A. In comparison to this, General Motors and Stellantis trade at 0.35 and 0.17, respectively.

Take a look at how Ford’s EPS estimates have been revised over the past 90 days.

Ford stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research