Ford says its Q1 profit fell by two-thirds and it expects a $1.5 billion hit from tariffs this year
Ford Motor Co. says it expects to take a $1.5 billion hit to its operating profit from tariffs this year and is withdrawing its full-year financial guidance due to the uncertainty created by the Trump administration's evolving trade policy.
Ford said Monday that its net income fell by about two-thirds in the first quarter to $473 million, or 12 cents per share, from $1.33 billion, or 33 cents per share in the year-earlier quarter. Revenue dropped 5% to $40.66 billion.
The results topped the expectations of analysts surveyed by FactSet, who forecast earnings per share for the quarter would be flat. Revenue was forecast to be $38.02 billion. Still, the stock fell more than 2% in after-hours trading.
Last week, General Motors said it is bracing for a potential impact from auto tariffs as high as $5 billion in 2025. Ford and Tesla are expected to see a smaller impact from tariffs than GM and other automakers because they assemble more of their cars in the U.S. Still, what impact they do see won't be insignificant.
Ford originally forecast 2025 earnings before interest and taxes in a range of $7 billion to $8.5 billion, but on Monday the company said the risks associated with tariffs 'make updating full year guidance challenging right now given the potential range of outcomes.'
Ford CEO Jim Farley has been touting the advantage that higher domestic production gives his company and he did so again Monday, while acknowledging that the shake-up to the industry from tariffs is still in its early stages.
'It's too early to gauge the related market dynamics, including the potential industrywide supply chain disruptions,' said Farley said on an earnings call with analysts. 'Automakers with the largest U.S. footprint will have a big advantage, and, boy, that is that true for Ford. It puts us in the pole position.'
President Donald Trump says one goal of his trade policy is to move more manufacturing of products such as autos back to the U.S. Last week Trump signed executive orders to relax some of his 25% tariffs on automobiles and auto parts in a move the president said would allow automakers more time to transition their manufacturing operations.
Automakers and independent analyses have indicated that the tariffs could raise prices, reduce sales and make U.S. production less competitive worldwide.
The potential impact of tariffs dominated Ford's earnings calls, with one executive noting how just a little trouble with a few parts could have a dramatic effect.
'The rare earth materials from China, for example, how they are imported, not just for us, but for the entire industry, has become rather complicated over the last few weeks,' said Chief Operating Officer Kumar Galhotra. 'It would take only a few parts to potentially cause some disruption into our production.'
© Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Japan Today
13 hours ago
- Japan Today
Vietnam wants to be next Asian tiger and it's overhauling its economy to make it happen.
By ANIRUDDHA GHOSAL Beneath red banners and a gold bust of revolutionary leader Ho Chi Minh in Hanoi's central party school, Communist Party chief To Lam declared the arrival of 'a new era of development' late last year. The speech was more than symbolic— it signaled the launch of what could be Vietnam's most ambitious economic overhaul in decades. Vietnam aims to get rich by 2045 and become Asia's next 'tiger economy' — a term used to describe the earlier ascent of countries like South Korea and Taiwan. The challenge ahead is steep: Reconciling growth with overdue reforms, an aging population, climate risks and creaking institutions. There's added pressure from President Donald Trump over Vietnam's trade surplus with the U.S., a reflection of its astounding economic trajectory. In 1990, the average Vietnamese could afford about $1,200 worth of goods and services a year, adjusted for local prices. Today, that figure has risen by more than 13 times to $16,385. Vietnam's transformation into a global manufacturing hub with shiny new highways, high-rise skylines and a booming middle class has lifted millions of its people from poverty, similar to China. But its low-cost, export-led boom is slowing, while the proposed reforms — expanding private industries, strengthening social protections, and investing in tech, green energy. It faces a growing obstacle in climate change. 'It's all hands on can't waste time anymore," said Mimi Vu of the consultancy Raise Partners. Investment has soared, driven partly by U.S.-China trade tensions, and the U.S. is now Vietnam's biggest export market. Once-quiet suburbs have been replaced with industrial parks where trucks rumble through sprawling logistics hubs that serve global brands. Vietnam ran a $123.5 billion trade surplus with the U.S. trade in 2024, angering Trump, who threatened a 46% U.S. import tax on Vietnamese goods. The two sides appear to have settled on a 20% levy, and twice that for goods suspected of being transshipped, or routed through Vietnam to avoid U.S. trade restrictions. During negotiations with the Trump administration, Vietnam's focus was on its tariffs compared to those of its neighbors and competitors, said Daniel Kritenbrink, a former U.S. ambassador to Vietnam. 'As long as they're in the same zone, in the same ballpark, I think Vietnam can live with that outcome," he said. But he added questions remain over how much Chinese content in those exports might be too much and how such goods will be taxed. Vietnam was preparing to shift its economic policies even before Trump's tariffs threatened its model of churning out low-cost exports for the world, aware of what economists call the 'middle-income trap,' when economies tend to plateau without major reforms. To move beyond that, South Korea bet on electronics, Taiwan on semiconductors, and Singapore on finance, said Richard McClellan, founder of the consultancy RMAC Advisory. But Vietnam's economy today is more diverse and complex than those countries were at the time and it can't rely on just one winning sector to drive long-term growth and stay competitive as wages rise and cheap labor is no longer its main advantage. It needs to make 'multiple big bets,' McClellan said. Following China's lead, Vietnam is counting on high-tech sectors like computer chips, artificial intelligence and renewable energy, providing strategic tax breaks and research support in cities like Hanoi, Ho Chi Minh City, and Danang. It's also investing heavily in infrastructure, including civilian nuclear plants and a $67 billion North–South high-speed railway, that will cut travel time from Hanoi to Ho Chi Minh City to eight hours. Vietnam also aspires to become a global financial center. The government plans two special financial centers, in bustling Ho Chi Minh City and in the seaside resort city of Danang, with simplified rules to attract foreign investors, tax breaks, support for financial tech startups, and easier ways to settle business disputes. Underpinning all of this is institutional reform. Ministries are being merged, low-level bureaucracies have been eliminated and Vietnam's 63 provinces will be consolidated into 34 to build regional centers with deeper talent pools. Vietnam is counting on private businesses to lead its new economic push — a seismic shift from the past. In May, the Communist Party passed Resolution 68. It calls private businesses the 'most important force' in the economy, pledging to break away from domination by state-owned and foreign companies. So far, large multinationals have powered Vietnam's exports, using imported materials and parts and low cost local labor. Local companies are stuck at the low-end of supply chains, struggling to access loans and markets that favored the 700-odd state-owned giants, from colonial-era beer factories with arched windows to unfashionable state-run shops that few customers bother to enter. 'The private sector remains heavily constrained," said Nguyen Khac Giang of Singapore's ISEAS–Yusof Ishak Institute. Again emulating China, Vietnam wants 'national champions' to drive innovation and compete globally, not by picking winners, but by letting markets decide. The policy includes easier loans for companies investing in new technology, priority in government contracts for those meeting innovation goals, and help for firms looking to expand overseas. Even mega-projects like the North-South High-Speed Rail, once reserved for state-run giants, are now open to private bidding. By 2030, Vietnam hopes to elevate at least 20 private firms to a global scale. But Giang warned that there will be pushback from conservatives in the Communist Party and from those who benefit from state-owned firms. Even as political resistance threatens to stall reforms, climate threats require urgent action. After losing a major investor over flood risks, Bruno Jaspaert knew something had to change. His firm, DEEP C Industrial Zones, houses more than 150 factories across northern Vietnam. So it hired a consultancy to redesign flood resilience plans. Climate risk is becoming its own kind of market regulation, forcing businesses to plan better, build smarter, and adapt faster. 'If the whole world will decide it's a can go very fast,' said Jaspaert. When Typhoon Yagi hit last year, causing $1.6 billion in damage, knocking 0.15% off Vietnam's GDP and battering factories that produce nearly half the country's economic output, roads in DEEP C industrial parks stayed dry. Climate risks are no longer theoretical: If Vietnam doesn't take strong action to adapt to and reduce climate change, the country could lose 12–14.5% of its GDP each year by 2050, and up to one million people could fall into extreme poverty by 2030, according to the World Bank. Meanwhile, Vietnam is growing old before it gets rich. The country's 'golden population' window — when working-age people outnumber dependents — will close by 2039 and the labor force is projected to peak just three years later. That could shrink productivity and strain social services, especially since families — and women in particular — are the default caregivers, said Teerawichitchainan Bussarawan of the Centre for Family and Population Research at the National University of Singapore. Vietnam is racing to pre-empt the fallout by expanding access to preventive healthcare so older adults remain healthier and more independent. Gradually raising the retirement age and drawing more women into the formal workforce would help offset labor gaps and promote "healthy aging,' Bussarawan said. © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Yomiuri Shimbun
a day ago
- Yomiuri Shimbun
GDP Increase / Impact of High U.S. Tariffs Mitigated for the Time Being
Although the impact of the high tariff policy of U.S. President Donald Trump's administration has been limited, sluggish personal consumption due to rising prices remains a concern. It will be important for companies to formulate aggressive investment strategies and continue substantial wage increases. The real gross domestic product for the April-June quarter increased by an annualized 1.0% from the previous quarter, according to a preliminary report. The January-March quarter was revised from negative to positive, marking five consecutive quarters of positive growth. In April, the U.S. government imposed 10% 'reciprocal' tariffs, with an additional 25% tariff on automobiles, raising concerns about adverse effects. However, Japanese automakers lowered export prices and focused on maintaining export volume rather than securing profits. As a result, overall exports increased by 2.0%. Capital investment rose by 1.3%, driven by robust investment in software to advance digitalization. Thanks to the efforts of companies to mitigate the impact of Trump's tariffs, the latest GDP data apparently confirmed that the Japanese economy is on a moderate recovery track. In late July, the United States and Japan reached a tariff agreement, which has somewhat dispelled the uncertainty about the future. Buoyed by the agreement, the Nikkei stock average has hit a record high and is now at the 43,000 level. The stock market rally is a tailwind for a growth-oriented economy in which both wages and investment are increasing. Companies need to proceed with domestic investment and wage increases. The government should strongly urge the U.S. government to determine the timing for lowering its automobile tariffs and other details at an early stage. However, there are many points to watch out for. Personal consumption, which accounts for more than half of the GDP, increased by only 0.2% from the previous quarter due to sluggish sales of beverages and other items. This suggests that households remain keen on saving. Although the impact of the U.S. high tariff policy has been temporarily mitigated, the burden on companies will increase as this policy continues. If automakers and other companies continue to absorb tariff costs, their profits will be squeezed. Eventually, they will have no choice but to raise prices to offset the tariffs. If that occurs, their price competitiveness in the United States will decline, and there is a possibility that consumers will refrain from purchasing their products due to the price hikes. Trump's tariff policy is difficult to predict. It is also necessary to be aware of the risk of global economic growth slowing down. To achieve a strong Japanese economy that is not swayed by external demand, focus should be placed on stable growth driven by domestic demand. To overcome prolonged high prices and stimulate consumption, it is essential for companies to continue to raise wages substantially. It is hoped that the government will promote investment and improve profitability through such means as labor-saving measures and digitalization to alleviate labor shortages and create an environment that is conducive to wage increases. (From The Yomiuri Shimbun, Aug. 16, 2025)
Nikkei Asia
a day ago
- Nikkei Asia
Trump says no imminent plans to penalize China for buying Russian oil
A vessel owned by Russia's leading tanker group, Sovcomflot, transits through Turkey in April 2024. China and India are the top two buyers of Russian oil. © Reuters August 16, 2025 13:37 JST WASHINGTON (Reuters) -- U.S. President Donald Trump said on Friday he did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks." Trump has threatened sanctions on Moscow and secondary sanctions on countries that buy its oil if no moves are made to end the war in Ukraine. China and India are the top two buyers of Russian oil. The president last week imposed an additional 25% tariff on Indian goods, citing its continued imports of Russian oil. However, Trump has not taken similar action against China. He was asked by Fox News' Sean Hannity if he was now considering such action against Beijing after he and Russian President Vladimir Putin failed to produce an agreement to resolve or pause Moscow's war in Ukraine. "Well, because of what happened today, I think I don't have to think about that," Trump said after his summit with Putin in Alaska. "Now, I may have to think about it in two weeks or three weeks or something, but we don't have to think about that right now. I think, you know, the meeting went very well." Chinese President Xi Jinping's slowing economy will suffer if Trump follows through on a promise to ramp up Russia-related sanctions and tariffs. Xi and Trump are working on a trade deal that could lower tensions -- and import taxes -- between the world's two biggest economies. But China could be the biggest remaining target, outside of Russia, if Trump ramps up punitive measures.
