A Little Good News for Ford Investors

It's been a tough start to 2025 for most automakers. Much of that tough start, with many automakers trailing the broader market, was due to tariff uncertainty. The Trump administration has made it clear that tariffs are a big agenda, regardless of the potential mayhem they could have caused the automotive industry's globalized and complex supply chain.

But thankfully, investors in Ford Motor Company (NYSE: F) received good news on the tariff front. Let's dig in.

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What's going on?

As it sits currently, the Trump administration has tariffs on imported cars, steel, aluminum, duties on goods imported from China, Canada, and Mexico, and a 10% base tariff on goods imported from nearly every country. That's a huge problem for automakers such as Detroit's Ford and General Motors. Both have extensive supply chains that can't be changed up at the drop of a hat, and often parts will cross borders multiple times before final assembly.

The little bit of good news came when the administration announced modifications to the tariffs. Now automakers importing vehicle parts will get a 15% tariff offset in the first year, and a 10% tariff offset in the second year. However, the 25% tariff on imported vehicles remains, and could raise the price of an imported vehicle by roughly $10,000.

How much damage?

For investors, it's important to be aware of how much these tariffs could cost automakers. "The burden from parts tariffs will likely be de minimis for the first two years," Wolfe Research wrote to investors.

According to Wolfe, Ford is expected to be one of the biggest winners due to its U.S.-centric production model, with the estimated future impact from a 25% tariff on imported vehicles to be under $1 billion. That's favorable compared to General Motors and Stellantis tariff costs, which Wolfe estimates could range closer to $2 billion to $5 billion.

Already automakers have made adjustments to try to offset tariff costs and uncertainty. One example from General Motors is that the company paused the remainder of its $6 billion share buyback. The automaker noted it would finish the $2 billion accelerated repurchase portion, and then pause the remaining share repurchases. The silver lining was that GM felt confident enough in its financials that it even increased the dividend.

More good news

In other good news for Ford investors, the automaker is extending its employee-pricing-for-all discounts by more than a month to July 6. The move can cut thousands of dollars off the price of most vehicles and should provide a boost to the company's sales demand.

"The campaign has resonated deeply with the public," Rob Kaffl, Ford's director of U.S. sales and dealer relations, said according to Automotive News. "Customers know Ford delivers when it counts, and so far, the program has delivered double-digit sales increases and strong expected share growth over the last month."

What it all means

At the end of the day, there will still be tariff pain, but it looks like the automotive industry will successfully avoid any worst-case scenarios. The relief on tariffs should be fairly manageable during the first two years, giving automakers time to adjust production strategies to further offset or avoid tariffs.

For Ford investors in particular, this is big news because the tariff uncertainty at least put a dividend cut on the table as an option, and any relief on tariff impacts makes the chance of a dividend cut less likely. Ultimately, the tariff relief and continued employee pricing is just a little good news for investors in an uncertain time.

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Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool recommends General Motors and Stellantis. The Motley Fool has a disclosure policy.