Jim Farley, the CEO of Ford, said on Wednesday that the Trump administration’s tariff policy would saddle the automaker with a $2 billion bill while benefiting its Japanese rivals.
“Our tariff bill is $2 billion, and that’s a net number,” Farley said in an earnings call. The company had projected a tariff hit of $1.5 billion in its last quarter.
Farley told analysts he expected automakers to adopt a regional rather than globalized approach toward their businesses. In addition to tariffs, Farley said the change was being driven by the rise of electric vehicles and new carbon regulations.
“We increasingly see Europe, North America, and Asia becoming kind of regional businesses with tariff rates that are aligned for those three or four regions,” Farley said.
“This is quite a fundamental change,” he added.
Representatives for Ford did not respond to a request for comment from Business Insider.
Farley said in an interview with Bloomberg on the same day that the Trump administration’s reduced tariffs on Japan would give its Asian rivals a “meaningful” cost advantage. Last week, President Donald Trump said the US would lower its tariffs on Japan to 15% from 25%.
The reduced tariffs, lower labour costs, and favorable exchange rates “really advantage their export,” Farley said.
A Kentucky-built Ford Escape could cost $5,000 more than a Japanese-made Toyota Rav4, while a Michigan-made Ford Bronco might be undercut by a Toyota 4Runner to the tune of $10,000, Farley added.
Farley told Bloomberg that Ford was working with the Trump administration to “minimize our tariff expense so that we can get more competitive.”
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“But the bottom line is our plan at Ford is not to compete in those commodity segments,” he continued.
This isn’t the first time Farley has talked about the challenges Ford faces in the face of a new slate of tariffs. Farley said in an interview with Bloomberg earlier this year that Trump’s 25% tariff on Canada and Mexico was a “windfall for South Korean and Japanese companies.”
“In our guidance, we can handle a couple of weeks of tariffs. If it goes beyond that, obviously, it will be billions and billions of incremental profit headwinds for the company,” Farley told the outlet in February.
On Wednesday, Ford’s shares fell by nearly 1.6% in after-hours trading. The company’s shares are up by 9.8% year to date.
When asked about Farley’s remarks, the White House said in a statement to Business Insider that the Trump administration is in “constant touch with the auto industry.”
“The administration is simultaneously working with our domestic steel, aluminum, and copper industries to ensure that they can meet the needs of American industry by expanding production right here at home,” Kush Desai, a spokesperson for the White House, said.
“Revitalizing the American auto, steel, aluminum, and copper industries are not mutually exclusive goals,” he added.
August 1, 12:00 a.m. — This story has been updated with comments from Kush Desai, a spokesperson for the White House.
