[By Guancha Observer Network, Shao Yun]

Local time on May 5, one of the "Big Three" American automobile manufacturers, Ford, publicly disclosed that US President Trump's tariff policies would result in a loss of $1.5 billion in adjusted EBIT (earnings before interest and taxes) for this year. Considering major industry risks such as tariffs, Ford announced it would withdraw its previous earnings forecast for 2025.

Ford stated on May 5 that if not for the company's strategy of "bypassing" some tariffs, the impact might have been even greater. Bloomberg cited CFO Sherry House as saying that the total cost of tariffs is approximately $2.5 billion, of which about $1 billion can be offset by measures such as transporting some vehicles and components from Mexico to Canada via bonded trucks to avoid US tariffs.

Ford disclosed this information when releasing its first quarter 2025 financial report on May 5. The company also announced the withdrawal of its earlier full-year earnings forecast for 2025. Ford listed seven risk factors, including potential "industry-wide supply chain disruptions" related to Trump's tariffs, possible increases in US tariffs in the future, retaliatory tariffs and other restrictive measures that countries may impose, among others.

"These are significant industry risks that could have a substantial impact on financial performance. Given the various possible outcomes, updating the full-year earnings forecast at this time is quite challenging," Ford said.

According to Ford's full-year earnings forecast released in February, the company originally predicted that its adjusted EBIT for 2025 would be between $7 billion and $8.5 billion. However, this figure did not take into account the impact of tariffs. Reuters reported on May 5 that CFO Sherry House said that without considering the impact of tariffs, the company was likely to achieve its previous earnings target.

On April 30, 2025, workers were assembling vehicles at the Ford Motor Factory in Louisville, Kentucky, USA. Visual China.

Ford's financial report on May 5 showed that its first-quarter revenue fell by 5% year-on-year to $40.7 billion. Ford said the main reason was that production halts or reductions occurred during the introduction of new models or line changes for some models, including the highly profitable Kentucky truck factory. Net profit was $47.1 million, a nearly 65% drop compared to the same period last year. Adjusted revenue decreased to $1 billion, compared to $2.8 billion in the same period last year.

Although the net profit situation was better than analysts' and Ford's own expectations in February, Ford's stock price still fell more than 2% after hours on May 5. Garrett Nelson, an analyst at the American Financial Research and Analysis Center (CFRA), analyzed that investors were also focusing heavily on Ford's $1 billion in adjusted revenue for the first quarter, which translates to an annualized figure of only about $4 billion, far below Ford's previous earnings forecast in February.

According to US media reports, Ford is already the US automaker relatively least affected by tariffs because about 80% of the cars sold in the US market are produced in domestic factories. By comparison, the proportion for its competitor General Motors is only 53%. However, CEO Jim Farley told analysts in a conference call on May 5 that the impact of tariffs on Ford is "huge," and "the situation is changing rapidly; I think this is all new to everyone."

The 25% tariffs previously announced by the US on imported cars and key parts have now come into effect. On April 29, local time, Trump signed an announcement allowing compensation for auto producers who import parts and assemble vehicles in the US. The maximum compensation amount can reach 3.75% of the vehicle's retail price, and this compensation cap will decrease to 2.5% of the retail price in the second year.

Last week, General Motors, another member of the "Big Three" alongside Ford, lowered its profit outlook, expecting tariffs to reduce its full-year profit by $4 billion to $5 billion, roughly three times what Ford expects. CFO Paul Jacobson said that $2 billion of this is due to tariffs on imported vehicles, with the rest coming from imported parts. Jacobson added that the new subsidies announced by the White House will "be very helpful," but cannot fully offset the exposure in non-USMCA (United States-Mexico-Canada Agreement) countries where parts are imported.

However, General Motors has not yet stopped issuing its full-year earnings forecast. In response, David Whiston, an analyst at Morningstar Consulting, said: "It is indeed a bold move for Ford to withdraw its full-year forecast given that General Motors has updated its earnings forecast including tariffs. But fairly speaking, there is indeed great uncertainty right now." Additionally, Stellantis Group recently suspended its earnings outlook due to "uncertainty related to tariffs."

According to a study by the American Automotive Research Center (CAR) in April, the 25% car tariffs imposed by the Trump administration starting April 3 will increase costs for US automakers by about $108 billion in 2025. Ford previously warned that if the US government continues to impose tariffs, the company will have to raise prices in the US market starting July. On May 5, Ford evaluated that the subsidies issued by the White House were "an important step," but the company was still monitoring subsequent policy changes. CFO Sherry House said that Ford would "focus on managing the areas we can control."

On May 5, The Wall Street Journal analyzed that despite the dim performance so far, the first quarter may actually become the "peak" of the automotive industry in 2025. Before the tariffs took effect, a large number of consumers rushed to dealerships to purchase cars ahead of time, driving a temporary surge in car sales. During the "rush-buying spree," Ford was one of the few manufacturers offering car purchase incentives, expanding its market share. Industry insiders had expected sales to slow down in the second half of the year.

This article is an exclusive contribution from the Guancha Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7501195827668238859/

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