Dive Brief:
- A 25% tariff on imports from Mexico and Canada would be detrimental to the U.S. auto industry, Ford Motor Co. CEO Jim Farley said during an investor conference Tuesday.
- Although currently delayed until March, higher duties on products coming into the U.S. from two of its biggest trading partners would allow automakers in Europe and Asia to gain market share in the highly competitive North American marketplace, leading to “one of the biggest windfalls for those companies ever,” he said.
- “It frankly gives free rein to South Korean and Japanese and European companies that are bringing 1.5 million to 2 million vehicles into the U.S. that wouldn't be subject to those Mexican and Canadian tariffs,” Farley said.
Dive Insight:
Domestic automakers, including General Motors, have been considering strategies to mitigate higher duties on products coming into the U.S. from Mexico and Canada.
However, Farley raised concerns about the impact blanket tariffs would have on U.S. automakers.
“If you look at the tariffs, let's be real honest, long term, a 25% tariff across the Mexico and Canadian border would blow a hole in the U.S. industry that we have never seen,” he said.
About 76% of the estimated 3.5 million vehicles manufactured in Mexico annually are imported into the U.S. according to 2023 data from the International Trade Administration. Additionally, 93% of vehicles made in Canada were shipped to the U.S. as of 2023, per the Canadian Vehicle Manufacturers’ Association.
Ford built 227,199 vehicles in Mexico in 2024, according to the Asociación Mexicana de La Industria Automotriz. The company also manufactured 54,920 vehicles in Canada through Q3 2024.
Farley said Ford is complying with the guidelines of the United States-Mexico-Canada Agreement, but 25% tariffs on vehicles coming into the U.S. from Mexico and Canada “would be devastating.”
Also weighing on Ford is how tariffs will impact suppliers and its supply chain, CFO Sherry House said during the investor conference. She said the automaker is monitoring negotiations between the U.S., Canada and Mexico but will continue preparations to head off any fallout.
“We're doing exactly what you would expect in terms of preparedness in all of our factories and our supply chain and our logistics organizations,” she said.
