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Ford faces $900m tariff hit due to late policy change
Ford reported that its tariff expenses for 2025 doubled to approximately $2 billion, a sharp increase driven by an unexpected adjustment to a U.S. tariff relief program.
The automaker said the Trump administration's last-minute revision to the effective date of the relief scheme in December reduced the credits it could claim, costing the company an additional $900 million (£660 million). The program, designed to help car manufacturers offset tariffs on imported parts used in U.S.-assembled vehicles, had been expected to ease financial pressures.
Policy shift disrupts cost projections
Ford CEO Jim Farley stated that the late change in tariff credit rules left the company with significantly higher costs than anticipated. "The unexpected and late-year adjustment disrupted our financial planning," Farley said in a statement.
The increased tariff burden highlights the ongoing uncertainty automakers face as they navigate trade policies and lobby for exemptions. Industry analysts note that such volatility complicates long-term investment decisions.
EV strategy pivot adds to financial strain
Separately, Ford disclosed a $19.5 billion charge related to its scaled-back electric vehicle (EV) ambitions. The company cited weak demand and regulatory shifts under the Trump administration as key factors in its decision to abandon plans for large EV models.
"The business case for large EVs has eroded," Ford said, echoing concerns raised by General Motors, which announced a $1.6 billion write-down in October as it reduced its EV targets.
Ford is now prioritizing hybrid and gasoline-powered vehicles, along with smaller, more affordable EVs, to align with market demand.
Quarterly revenue beats expectations despite losses
Despite the tariff costs and a $11.1 billion net loss in the fourth quarter, Ford reported revenue that surpassed analysts' forecasts. A fire at an aluminum supplier also weighed on profits, further straining the company's financial performance.
Executives expressed optimism about 2026, predicting improved profitability and reduced losses in its EV division. The company's shares rose modestly in after-hours trading following the earnings report.
Industry-wide challenges persist
The tariff and EV strategy shifts reflect broader challenges in the automotive sector, as companies balance trade policy risks with evolving consumer preferences and regulatory landscapes.
