(Credit: Emily Forlini)
Ford CEO Jim Farley today pushed back on the idea that President Trump's plan to impose a 25% tariff on goods from Canada and Mexico will be good for the US economy.
"Let's be real honest, long term, a 25% tariff across the Mexico and Canadian border would blow a hole in the US industry that we have never seen," Farley said at the Wolfe Research Auto, Auto Tech, and Semiconductor Conference in New York.
The move, currently set to go into effect on March 4, would handicap US companies like Ford, while giving foreign automakers "one of the biggest windfalls ever." That mostly applies to South Korean, Japanese, and European brands that would not be subject to tariffs on the roughly 1.5 to 2 million vehicles they import into the US, Farley says. (Think Kia, Honda, and BMW.)
US automakers are already struggling to compete globally with their electric vehicle lineups. Ford has been open about its inability to match Chinese companies like BYD, which are already producing low-cost EVs at high volumes. Ford, meanwhile, has not released a new EV since the F-150 Lightning in 2022, and says it has to focus on hybrids until it can make a more affordable fully electric vehicle.
Trump has also frozen federal funding for a nationwide charging network. Transportation Secretary Sean Duffy says electric vehicles are increasing the average price of a car for US consumers. However, these tariffs could have a far more severe effect, and make it more difficult for US car companies to scale up their EV businesses.
"There's a global street fight in the auto industry right now between electrification, zone electric architectures, and...the emergence of the Chinese as a global force in our industry," Farley says. "President Trump has talked a lot about making our US auto industry stronger, bringing more production here. [If] this administration can achieve that, it would be one of the most signature accomplishments. So far what we're seeing is a lot of cost, a lot of chaos."
Trump imposed a 10% tariff on Chinese imports on Feb. 4, a few days after he originally planned to do the same for Canada and Mexico at 25%. However, he extended the timeline to March 4 after Canada and Mexico made some border-related concessions, BBC reports. (Trump has also threatened to impose tariffs on the European Union.)
Farley says the 25% tariffs Trump implemented today on steel and aluminum would have less of an impact on Ford, which gets roughly 90% of its steel and aluminum from the US, and the remaining 10% from Canada and Mexico. Still, some of its US-based parts suppliers import steel from other countries, so Ford will still "have to deal with it," Farley says.
Trump may also remove the $7,500 federal tax credit for qualifying buyers who purchase an EV, which was part of Biden's 2022 Inflation Reduction Act (IRA). Farley cautioned against that, citing the investments Ford has already made in its EV infrastructure, such as its upcoming $11 billion Blue Oval City plant. It is expected to create 11,000 jobs in Tennessee and Kentucky.
"We've already sunk capital...and many of those jobs would be at risk if big parts of [the IRA] is repealed," Farley says.