NEW YORK: Ford Motor Co expects profit to jump in 2026 even after a surprise US$900mil tariff bill at the end of last year dented the carmaker’s earnings.
The Trump administration informed Ford on Dec 23 that the company could only apply a measure to trim tariffs paid on imported auto parts dating back to November, rather than May, chief financial officer Sherry House told reporters alongside the company’s fourth-quarter earnings report.
The change effectively doubled Ford’s tariff toll to US$2bil in 2025, she said, a level the company expects to face again this year.
The updated tariff outlook highlights how Ford continues to face elevated costs from President Donald Trump’s trade policies even as it expects demand for high-margin pickups and sport-utility vehicles (SUVs) to help push adjusted earnings before interest and taxes to as much as US$10bil in 2026, reversing a decline last year.
Ford will need to purchase additional, foreign-made aluminium subject to import taxes for its top-selling F-Series pickups to make up for supplies disrupted by last year’s fires at Novelis Inc’s mill in New York state.
Fallout from the episode cost the company about US$2bil worth of F-Series pickup production last year, and the Novelis site hit by the fires will not fully resume production until this summer, House said.
The added expenses come as Ford expects crank out more SUVs and pickups after Republican-led moves to eliminate cash penalties for failing to meet fuel economy and emissions regulations.
The regulatory reprieve in effect allows automakers to sell as many high-profit, low-mileage SUVs and pickups as they can build.
Ford in December said it would book US$19.5bil in charges tied to a sweeping overhaul of its electric vehicle business that has fuelled significant losses.
Part of that shift involves setting up a new business to sell energy storage cells to utilities and data centres, which House said will help increase the carmaker’s capital spending to as much as US$10.5bil this year.
“We’re seeing our profitability improve,” chief executive officer Jim Farley told reporters on the sidelines of the Detroit Auto Show in January.
“I’ve been here for five years as a CEO. I’m really looking forward to this year.
“For the full year, Ford’s EV business lost US$4.8bil, compared to a US$5.1bil deficit in 2024. The company still plans to introduce a new line of affordable EVs starting in 2027.”
Ford’s shares were little changed as Farley and House discussed the company’s results after US markets closed on Tuesday.
The stock had gained about 47% in the last 12 months, outpacing the S&P 500 Index’s 14% advance.
Sentiment on the Dearborn, Michigan-based carmaker has been improving as it chips away at high costs that have bedeviled the automaker for years, putting it at a disadvantage to rivals that Farley once pegged at US$8bil a year.
House said Ford cut US$1.5bil in costs last year, 50% above the company’s target. “The stock’s had good momentum,” David Whiston, an analyst with Morningstar Inc, said in an interview prior to Ford’s announcement. “It seems like they’re making a lot of progress on turning their costs around.”
Ford’s adjusted earnings dropped to US 13 cents a share in the fourth quarter, short of analysts’ average estimate for US 18 cents a share.
Ford Blue, the automaker’s traditional business that includes internal-combustion engine vehicle and gas-electric hybrids, earned US$727mil before interest and taxes in the fourth quarter, roughly half of what it made year-over-year.
Ford’s US vehicle deliveries rose 2.7% in the period. Ford’s electric vehicle unit, Model e, lost US$1.22bil on that basis, better than the nearly US$1.4bil it lost in the prior-year period. — Bloomberg
