Auto Industry Braces for Tariff Fallout and EV Policy Shifts
Key Takeaways
- Delayed tariffs on Mexico and Canada provide temporary relief, but uncertainty remains for automakers.
- Ford and other manufacturers could suffer from the removal of the EV tax credit and shifting emissions policies.
- Ford stock fell 5% after warning of continued losses in its EV and software divisions.
President Donald Trump’s proposed tariffs on Mexico and Canada could be devastating for the auto industry, according to Ford Motor Co.’s (F-6.50%) CEO.
Ford and other major automakers are closely watching the evolving trade landscape as the Trump administration delays tariffs on Mexico and Canada but moves forward with smaller levies on Chinese imports.
If those tariffs are enacted, the auto industry is expected to be among the most hurt, since almost every major automaker, including Ford, has work done in Canada and Mexico. Some 3.6 million light vehicles were imported from the two countries in 2024, accounting for 22% of all vehicles sold in the U.S, according to S&P Global Mobility.
Just shy of 15% of Ford’s sales are sourced from Mexico, according to S&P Global (SPGI+0.64%), less than rival Detroit automakers General Motors (GM-0.44%) and Stellantis (STLA+1.01%), which source 22% and 23%, respectively.
Ford CEO Jim Farley noted that, based on conversations with the Trump administration, Ford believes the federal government is committed to “strengthening, not weakening” the auto industry.
Beyond tariffs, Farley highlighted broader industry shifts, including the rise of Chinese automakers like BYD and the potential rollback of EV incentives under the Trump administration. The expected cancellation of the $7,500 tax credit for electric vehicles could significantly impact sales, compounding Ford’s ongoing losses in its EV and software division, projected to reach $5.5 billion in 2025.
Despite these challenges, Ford outperformed Wall Street expectations for late 2024, though its cautious 2025 outlook led to a 5% drop in pre-market trading. The company remains engaged with policymakers, emphasizing the need for stable trade and tax policies to support the industry’s long-term transformation.
Source: Ford
