Ford Warns of Price Hikes as Trump Tariff Uncertainty Lingers

Ford Motor Company F is preparing to increase prices on vehicles starting with those produced in May 2025 if President Donald Trump doesn't follow through on the tariff relief he's suggested for automakers.

Per a memo sent to dealers by Andrew Frick, president of Ford’s gas-powered and electric car divisions, the company anticipates it will need to adjust vehicle pricing unless there’s a significant shift in Trump’s tariff stance. These pricing changes would apply to vehicles built in May, which won’t reach U.S. dealerships until late June or early July, after Ford’s current employee-pricing-for-everyone promotion ends. The prices of vehicles already in inventory will remain unchanged. 

This warning marks the clearest indication yet that automakers may pass on some of the increased costs tied to Trump’s 25% tariffs on imported vehicles. It comes just two days after Trump mentioned that he was considering a temporary break from the tariffs to allow carmakers more time to shift production back to the United States. Trump is also expected to impose similar duties on certain imported car parts by May 3.

While Ford is still working to understand the full scope of Trump’s trade policies, it expects some tariffs will stay in place for the foreseeable future. Detroit automakers have been actively lobbying the White House for exemptions on parts they argue are critical and would otherwise cause serious financial strain.

Although Ford manufactures 80% of the vehicles it sells in the United States at domestic plants, it builds most budget-friendly models, the electric Mustang Mach-E, the Maverick small pickup and the Bronco Sport SUV in Mexico.

High Tariff to Further Strain F’s Shrinking Sales & Profits

Ford has already been struggling with stiff competition, pricing pressure and significant costs associated with new-generation EV development. After having incurred losses of $4.7 billion in its EV business in 2023, Ford’s loss from Model e widened to $5.07 billion in 2024. Discouragingly, the company expects segmental loss in the range of $5-$5.5 billion in 2025. The automaker’s full-year adjusted EBIT is forecasted between $7 billion and $8.5 billion, down from $10.2 billion in 2024. 

Notably, Ford’s weak guidance doesn’t even take into account any changes in policies from the Trump administration. These tariffs are expected to increase raw material costs and finally translate to a high cost of vehicles, thereby derailing demand and affecting the sales and profits of Ford.

Other Automakers to Get Impacted by High Tariffs

High tariffs could impact General Motors Company’s GM results as the company imported roughly 750,000 vehicles from Canada/Mexico in 2024. The higher tariffs would not only affect fully assembled vehicles but also the cost of parts sourced from Mexico, further escalating production costs for GM’s U.S.-based plants. 

Tariffs on steel and aluminum could raise Tesla, Inc.’s TSLA vehicle costs, hurting affordability or squeezing margins. If tariffs on Mexico and Canada are enacted, supply chain disruptions could add further pressure. With these tariffs, the cost of vehicles is expected to rise, and affordability issues could weigh on demand. If Tesla absorbs additional costs, it will further strain its already squeezing margins. Either way, these tariffs will put pressure on Tesla.

Ford Stock Performance and Estimates

Ford shares have lost 22.1% in the past year, underperforming the Zacks Auto, Tires and Trucks sector’s decline of 4.3% and the Zacks Automotive - Domestic industry’s growth of 14.1%. 

The Zacks Consensus Estimate for F’s 2025 sales and earnings indicates a year-over-year decline of 5.12% and 27.17%, respectively. The Zacks Consensus Estimate for its earnings has moved down over the past 30 days.

F stock currently carries a Zacks Rank #5 (Strong Sell). 

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

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

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