Can Ford's US Muscle Shield It From the Tariff Crossfire?

Ford Motor Company F is anticipating pressure built from tariffs in the upcoming periods. The industry-wide supply chain is yet to wholly grasp the impact of tariffs on production, changes in the implementation of tariffs and retaliatory tariffs. In this context, Ford announced its prediction of a net adverse adjusted EBIT impact of about $1.5 billion for 2025. It logged $1 billion adjusted EBIT in the first quarter of 2025, but due to prevailing instability in the industry, guidance has been withdrawn.

Although there remains uncertainty, Ford, being one of the largest auto manufacturers in the United States, might expect certain advantages. Ford, compared with its competitors, built 300,000 more vehicles in the United States last year. This provides the company with a competitive edge. Its peers will face difficulties in increasing manufacturing capacity in the country, as that would entail huge costs, compromising affordability. Ford’s 80% parts in use are already USMCA trade rules compliant. The company seeks other ways to build more parts locally.

It has also implemented smart changes to tackle impacts. Ford now ships vehicles from Mexico to Canada using bonded carriers, which avoids U.S. tariffs. A similar strategy is also followed for auto parts that only travel through the United States. Ford seems confident as it has been building more in America since 2020, investing $50 billion to grow vehicle and battery production.

Peer Comparison

General Motors Company (GM), an auto giant of America, has predicted declines in profit this financial year. It imported the highest number of cars into the United States in the last year. General Motors lowered guidance owing to an estimated $4 million to $5 million exposure to the impacts of auto tariffs. However, a mitigation of 30% of cost increases due to tariffs can be expected through General Motors’ tailored initiatives.

Stellantis N.V. (STLA), another multinational automaker, is also suspending its guidance for fiscal 2026 amid tariff-related challenges. Stellantis has plans to reassess its capital spending strategies. The company has also brought down its vehicle imports in April in response to tariffs. Stellantis, along with other giants, is working with the government to soften the auto tariff woes.

The Zacks Rundown for Ford

Shares of Ford have lost around 5.1% over the past year against the industry’s growth of 20.8%.

From a valuation standpoint, F trades at a forward price-to-sales ratio of 0.26, below the industry average. It carries a Value Score of A.

Take a look at how Ford’s EPS estimates have been revised over the past 30 days.

Ford currently carries a Zacks Rank #3 (Hold). 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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