Ford Motor said on Wednesday that U.S. tariffs on imported vehicles and raw materials such as steel and aluminum are set to cost the company more than previously projected, prompting a downward revision to its full-year earnings outlook. The company now expects tariffs to reduce annual gross revenues by as much as $3 billion, up from the earlier projection of $2.5 billion.
The announcement sent shares of Ford down about 3% in after-hours trading. The automaker reported that tariffs reduced second-quarter results by $800 million, although its strong U.S. manufacturing footprint helped limit the blow compared to some of its rivals.
Chief Financial Officer Sherry House attributed the increased annual tariff burden to persistently high duties on imports from Mexico and Canada, as well as elevated costs for steel and aluminum. “We’ve had to update our assumptions based on how long some of these elevated import costs have persisted,” House said.
Ford reinstated its full-year guidance after suspending it in May to reassess the impact of trade policy. The company now expects 2025 adjusted earnings before interest and taxes in the range of $6.5 billion to $7.5 billion, down from the previous estimate of $7 billion to $8.5 billion issued in February.
Second-quarter revenue rose 5% to $50.2 billion, bolstered by strong demand for gasoline and hybrid vehicles supported by aggressive financing deals. Ford’s zero-down, zero-interest, and zero-payment campaign attracted consumers, helping the company gain market share. However, net income for the quarter was a loss of $36 million, driven by special charges including a $570 million recall and the cancellation of a three-row electric SUV project.
Ford’s domestic production accounts for approximately 80% of its U.S. vehicle sales, providing some insulation from tariffs. Still, the company faces rising raw material costs and supply chain issues, including a shortage of rare earth magnets from China. Its EV and software business remains a key pressure point, with a $1.3 billion operating loss for the quarter.
Ford CEO Jim Farley said the company is engaged in daily talks with the White House to reduce tariff exposure, particularly on imported parts. “We see there’s a lot of upside depending on how the negotiation goes with the administration,” Farley said.
General Motors and Stellantis have reported steeper tariff-related headwinds, estimating respective full-year impacts of $4 billion to $5 billion and $1.7 billion. Ford aims to offset about $1 billion of its total tariff burden.
Despite some positive performance in traditional vehicle segments, ongoing quality issues and high recall volumes continue to weigh on Ford’s bottom line. The removal of a $7,500 federal EV tax credit in September is also expected to hamper electric vehicle sales in the coming quarters.