Ford and other companies expecting billions in tariff impacts this year

As car companies report earnings for the first quarter of the year, many are signalling future profits will be impacted due to U.S. tariff policies.

Many global automakers are planning for the costly impact of the trade war, and some saying they expect to see profits drop by billions of dollars by the end of the year, mainly citing tariffs on the auto industry imposed by U.S. President Donald Trump.

Companies like Ford, General Motors, Volkswagen, Stellantis, and many others expect tariffs to lead to higher costs to manufacture vehicles, and if consumers end up with a higher price tag as a result, then there could be a ripple effect. In some cases, that has already led to job losses.

While some changes have been made to give the auto industry some wiggle room, companies are still expecting to take a financial hit.

“There’s no economist in the world that doesn’t know that input costs are going up. And the automobile business is a big ticket, small margin business,” says dealership manager Andrew MacPhee in an interview adding, “there’s no choice but to have a price increase in all manufacturers.”

Ford Motors Inc. is in the spotlight after the company announced to the surprise of shareholders that it is suspending its forward guidance for the year. In other words, the financial future for the company is uncertain and they don’t want to give shareholders any false hope.

What Ford did say is they expect to see profits drop by $2.5 billion dollars this year citing the trade war as a main factor. The company added that $1 billion of the loss could be offset by cost-cutting and suggested the losses are ‘tariff-related’, and often those cost-cutting measures include job cuts.

Other carmakers are making similar predictions about the impact tariffs will have on the bottom line, including luxury brands like Ferrari, as well as Audi and Porsche (both under the Volkswagen Group banner).

Ferrari announced in March that U.S. orders made before April 2 would not see any price changes, but those made after could see increases of up to ten per cent, citing “import tariffs on EU cars into the USA.”