Ford Motor Company CEO Jim Farley has welcomed President Donald Trump’s executive order offering a partial reprieve from escalating auto tariffs but warned that the U.S. still lacks a coherent industrial policy to secure the future of domestic automaking.
While the move offers temporary relief to companies like Ford, Farley said it falls short of the deep structural reforms needed to stabilize the sector, encourage exports, and maintain the affordability of vehicles for American consumers.
The executive order, signed Tuesday, allows partial reimbursement of the upcoming 25% tariffs on imported automotive parts—but only for vehicles that undergo final assembly in the U.S. That measure, set to remain in place for two years, was introduced in response to sustained pleas from automakers who have warned of severe disruptions to production and price hikes across the supply chain. These new tariffs, which take effect May 3, come on top of Trump’s earlier 25% tariff on imported vehicles and levies on materials like steel and aluminum, a layered approach that industry players describe as “tariff stacking.”
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Speaking at the launch of the 2025 Ford Expedition at the company’s Kentucky Truck Plant, Farley said the tariff modification would help ease short-term pressures, but cautioned that it does not amount to a full solution.
“The changes this week on tariff plans will help ease the impact for automakers, suppliers and consumers, but … we need to continue to work closely with the administration on a comprehensive set of policies to support our shared vision of that healthy and growing auto industry, and we are not there yet,” Farley said.
The Ford chief urged policymakers to adopt a forward-looking strategy that rewards companies for producing and exporting from U.S. soil.
“So many of the vehicles we build here are exported around the globe. Shouldn’t we get credit for that?” he said. “Those are American jobs and we have to keep working on affordable parts to ensure that those supply chains promote domestic growth and affordable vehicles in our country.”
The Sector-wide Effect
While Ford appears cautiously optimistic about navigating the tariff impact, thanks in part to its expansive U.S. manufacturing footprint, the broader auto industry is reeling from the uncertainty. Some foreign automakers have already begun halting exports to the United States, while others are urgently reevaluating their supply chains and pricing models.
Several auto companies, including Audi, Jaguar Land Rover, and Mitsubishi, have placed a temporary freeze on U.S.-bound exports until the full impact of the new tariff regime is understood.
Others are exploring whether increased localization of final assembly operations could allow them to qualify for tariff reimbursements under the new order, but such shifts take time and capital.
This upheaval has set off alarm bells across the sector, especially for smaller parts suppliers who operate on razor-thin margins. Industry associations warn that cascading costs could prompt layoffs, delays in new vehicle rollouts, and a contraction in investment just as automakers are transitioning to electric vehicles and advanced technologies.
Repercussions for Consumers and Jobs
The stakes are equally high for American consumers. Multiple industry analysts have said that the cumulative tariffs, if not offset, could result in price hikes of $1,000 to $2,500 per vehicle, depending on the model and complexity of imported components. That could push many entry-level vehicles out of reach for middle-class buyers, especially at a time of high interest rates and inflationary pressure.
At the national level, Farley warned that the U.S. risks missing a historic opportunity to reassert its global dominance in auto manufacturing. He floated a scenario in which all foreign companies matched Ford’s domestic output, saying it could yield 4 million more vehicles annually, 15 new manufacturing plants, and over 500,000 new jobs.
“Imagine if the companies who import all the vehicles in the U.S. treated American manufacturing like Ford,” Farley said — while noting that Ford itself still imports a share of its parts and vehicles from Mexico, Canada, and China.
Trump’s tariffs are intended to push manufacturers to “build American”, but many have criticized the move, arguing that the blunt-force approach lacks nuance and coordination.
The tariff is stirring friction between the Trump administration and the auto industry, which has warned that unpredictable tariff policy is undermining long-term investment decisions. Trump has signaled no intent to withdraw the broader 25% vehicle import tariffs, and on Wednesday he again defended the new round of parts tariffs as necessary to prevent outsourcing and protect American jobs.
However, the political optics are shifting as the consequences of the trade war become more visible. With the 2025 model year approaching and consumer prices still high, automakers are preparing for more turbulence.
Farley indicated that the policy must reward the kind of manufacturing and exporting done in the U.S., and can’t just be about protection but about growth.
With May 3 fast approaching, industry leaders are lobbying the administration to reconsider or delay the full implementation of the new tariffs or expand exemptions and credits for domestic production. Some experts believe that if pushback grows stronger, the administration may revisit its approach.