Ford, the US car maker, reported that its Ford tariff costs for 2025 were $900 million (£660 million) higher than initially expected, primarily due to a last-minute change in the Trump administration’s tariff relief program. The program, designed to assist car manufacturers by offsetting tariffs, lets firms importing parts for vehicles assembled in the US apply for credits. However, the company learned in December of a new, delayed effective date for the policy, resulting in fewer benefits from the credits than anticipated.
Ford’s Tariff Costs Soar in 2025
Chief Executive Jim Farley highlighted that Ford’s Ford tariff costs in 2025 amounted to roughly $2 billion, double what the company had initially expected. He attributed this to the “unexpected and late-year change in tariff credits for auto parts.”
This unexpected surge in Ford tariff costs underscores the ongoing challenges faced by automakers in the US. Despite efforts to lobby for exemptions, companies like Ford continue to navigate tariff volatility, which impacts both their bottom lines and future investment strategies.
Ford’s Shift in Electric Vehicle Plans
In addition to the Ford tariff costs, Ford had previously disclosed a significant $19.5 billion hit from its shift away from electric vehicle (EV) plans. This adjustment, compounded by the tariff surprise, contributed to the company’s fourth-quarter net loss of $11.1 billion. Ford’s decision to scale back its large EV production was prompted by weak demand and changing regulatory standards under the Trump administration. The company indicated that the business case for large EV models had “eroded.”
Instead, Ford is now redirecting its focus towards profitable hybrid and gasoline-powered vehicles, alongside more affordable, smaller EV models. This shift is part of a broader trend in the automotive industry, as General Motors made a similar announcement in October, reporting a $1.6 billion loss due to declining demand for larger electric vehicles.
Challenges From Supplier Issues and Tariff Volatility
Further complicating Ford’s financial situation was a fire at one of its aluminium suppliers, which added additional pressure on the company’s profits last year.
Despite these challenges, Ford’s Ford tariff costs and supply chain issues, the company’s quarterly revenue exceeded analysts’ expectations. The company’s executives are optimistic, forecasting higher profits in 2026 and predicting a reduction in losses from its EV division.
Ford’s Outlook for 2026
Despite the tariff shock and net loss, Ford’s shares saw a modest uptick in after-hours trading, signaling some investor confidence in the company’s recovery trajectory.
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