Ford Motor Company Halts Shipments to China

Ford Motor Company halted shipments of SUVs, pickup trucks, and sports cars to China due to retaliatory tariffs of up to 150% imposed by China in response to U.S. import taxes. The affected models include F-150 Raptors, Mustangs, Michigan-built Bronco SUVs, and Kentucky-made Lincoln Navigators. Ford confirmed the suspension, stating, “We have adjusted exports from the U.S. to China in light of the current tariffs.” Shipments of U.S.-built engines and transmissions to China continue, and the China-made Lincoln Nautilus is still exported despite tariffs.

Ford, which produces 80% of its U.S.-sold vehicles domestically, is better positioned than some competitors but may raise vehicle prices if tariffs persist, according to an internal memo. The Center for Automotive Research estimates that 25% tariffs on automotive imports could cost automakers $108 billion in 2025. The Wall Street Journal first reported the halt, citing sources familiar with the matter.

Ford’s suspension of SUV, pickup, and sports car exports to China due to 150% tariffs is estimated to cause a $900 million profit loss from lost sales in a major market, based on $330 million revenue from 5,500 vehicles. Tariffs on imported parts (25%) and vehicles like the Maverick and Bronco Sport from Mexico will raise production costs. Even U.S.-assembled vehicles, such as the F-150, rely on 40-60% imported parts, increasing costs by an estimated $5,000 per vehicle. The Center for Automotive Research projects a $108 billion cost escalation for U.S. automakers in 2025.

Analysts have cut Ford’s 2025 earnings per share forecast by 63%, reflecting higher costs and potential sales drops. Morningstar maintains Ford’s fair value at $16 per share, modeling tariffs for nine months. Ford warned dealers of potential price hikes starting June 2025 if tariffs persist, with estimates of 5% increases for U.S.-made vehicles and 15-20% for imported models. This could reduce demand, further squeezing profits.

Ford’s “From America, for America” employee pricing discounts aim to maintain sales, leveraging its 80% U.S. production to mitigate tariff impacts. However, reduced margins and fewer discounts may still hurt profitability. Ford CEO Jim Farley noted that prolonged tariffs could wipe out billions in industry profits, with Ford facing significant losses if tariffs extend beyond weeks.

Despite Ford’s relatively strong position due to high domestic production, reliance on imported parts and lost China sales pose substantial risks. Profit declines are expected to be steep unless tariffs are eased or supply chains are restructured, which could take years and billions in investment. 25% tariffs on imported vehicles and automotive parts from all countries except Canada, effective from early 2025. Additional 100% tariffs on electric vehicles (EVs) from China, though Ford has minimal exposure here. Tariffs apply to critical components like batteries, steel, and aluminum, increasing costs for U.S.-assembled vehicles.

Impact on Costs

Ford vehicles, even those assembled in the U.S., rely on 40-60% imported parts (e.g., from Mexico, Asia). The Center for Automotive Research estimates a $5,000 per-vehicle cost increase due to part tariffs. Ford’s Mexican-built Maverick pickup and Bronco Sport SUV face direct 25% vehicle tariffs, potentially raising prices by 15-20%. Total industry cost escalation projected at $108 billion in 2025, with Ford bearing a significant share due to its scale.

Ford warned dealers of price hikes starting June 2025, with U.S.-made vehicles potentially rising 5% and imported models 15-20%. Higher prices risk reduced demand, especially for price-sensitive segments like compact trucks and SUVs. Ford’s “From America, for America” discount program aims to offset demand drops but compresses profit margins.

China’s Retaliatory Tariffs

Up to 150% tariffs on U.S.-built vehicles, targeting Ford’s high-margin SUVs (Bronco, Lincoln Navigator), pickup trucks (F-150 Raptor), and sports cars (Mustang). Implemented in response to U.S. tariffs, effective early 2025. Ford halted shipments of affected models to China, its second-largest market, resulting in an estimated $900 million profit loss from 5,500 vehicles ($330 million in revenue).

Continued exports of U.S.-built engines, transmissions, and China-made Lincoln Nautilus face tariffs, reducing profitability. Lost sales in China weaken Ford’s competitive position against domestic Chinese automakers and tariff-exempt rivals. Long-term absence from China could erode brand presence, requiring costly re-entry efforts.

Analysts slashed Ford’s 2025 earnings per share by 63%, reflecting higher costs and lost China sales. Morningstar’s fair value estimate remains $16 per share, assuming tariffs last nine months. Imported parts tariffs increase production costs across Ford’s lineup, even for its 80% U.S.-produced vehicles. Supply chain restructuring to reduce reliance on imports could cost billions and take years, with no immediate profit relief.

Price hikes to offset tariffs may reduce sales volume, while discounts to maintain demand cut margins. Ford’s high-margin F-Series trucks, critical to profits, face cost pressures from imported components, threatening a key revenue driver. Ford CEO Jim Farley warned that prolonged tariffs could erase billions in industry profits, with Ford’s exposure amplified by its reliance on trucks and SUVs. The Center for Automotive Research estimates a $7,000 per-vehicle profit hit for U.S. automakers under sustained tariffs.

Ford is exploring increased domestic sourcing, but retooling supply chains is slow and capital-intensive. Continued engine and transmission exports to China suggest selective cost absorption to maintain some market presence. Ford’s stock dropped 35.2% year-over-year, reflecting investor concerns over tariff-driven profit declines. This highlight fears of margin erosion and long-term competitiveness, with some investors betting on tariff relief or Ford’s adaptability.

Ford’s 80% U.S. production gives it an edge over rivals like Stellantis (50% U.S. production) but imported parts exposure limits advantages. Competitors like Toyota, with more localized supply chains, may face less severe impacts, pressuring Ford’s market share. Relocating parts production to the U.S. or Canada could mitigate tariffs but requires $10-20 billion in industry investment, per analyst estimates. Ford’s existing U.S. manufacturing base (e.g., Michigan, Kentucky plants) provides a foundation but not full insulation.

Higher vehicle prices could shift demand to smaller, cheaper models or competitors, squeezing Ford’s truck-heavy portfolio. Inflationary pressures from tariffs may further erode consumer purchasing power, amplifying sales risks. Tariff duration remains unclear. A nine-month scenario is modeled, but extension into 2026 could double profit losses. Potential exemptions for Canada under USMCA may shift Ford’s sourcing strategy, though Mexico’s exclusion complicates this.

The tariffs impose immediate profit hits through lost China sales ($900 million), higher production costs ($5,000 per vehicle), and potential demand declines from price hikes. Ford’s 2025 earnings face a 63% downgrade, with long-term risks to market share and competitiveness unless tariffs ease or supply chains adapt.