AUTONEWS

Ford CEO says tariffs would “tear a hole” in US industry

Ford Motor CEO Jim Farley will travel to Washington on Wednesday to warn members of the US Congress about the negative impacts of former President Donald Trump’s proposed 25% tariffs on Canada and Mexico. According to Farley, the measure would “tear a hole” in the American auto industry.

In a statement on Tuesday, Farley said that the imposition of these tariffs, whose deadline was postponed by Trump last week, would have a “devastating” effect on US automakers. In addition, according to the executive, the measure would benefit Asian and European competitors who would not face the same tariffs on vehicles imported from their home regions.

“President Trump has talked a lot about strengthening the US auto industry and bringing more manufacturing to the country,” Farley said during an industry conference organized by Wolfe Research in New York. “So far, what we’re seeing is a lot of cost and a lot of confusion.”

Farley has been one of the most outspoken leaders in the American auto industry in criticizing the impact of high tariffs. According to consulting firm AlixPartners, these tariffs could add $60 billion in costs to the industry, with much of that increase being passed on to consumers. Analysts at Wolfe Research estimate that the price of a new vehicle could rise by about $3,000.

“Realistically, in the long term, a 25% tariff on imports from Mexico and Canada would have an impact on the American auto industry that we have never seen before,” Farley warned.

Risk of job losses and economic impact...According to a report by the Brookings Institution, released on February 3, trade between the United States, Mexico and Canada supports more than 17 million jobs. If the 25% tariffs are implemented, it is estimated that more than 177,000 jobs will be lost in the United States. The study also indicates that American vehicle exports to Canada and Canada would fall by 25% 23% for Mexico.

Farley plans to detail these risks in meetings with lawmakers throughout the week. This will be his second trip to Washington in three weeks. In addition to the tariffs, he will also warn about the dangers of dismantling the Inflation Reduction Act (IRA), implemented by former President Joe Biden. The legislation provided federal subsidies for the construction of electric vehicle and battery plants in the United States, an industry in which Ford has already invested billions in states such as Tennessee, Ohio, Michigan and Kentucky.

“We have already invested capital,” Farley said. “Many of these jobs will be at risk if the IRA is repealed or significantly modified.”

Uncertainty in the automotive sector...Mike Manley, CEO of AutoNation Inc., one of the largest dealership chains in the United States, said in a conference call with investors on Tuesday that he is analyzing the impact of the tariffs implemented by Trump in 2018 to predict the possible effects of the new measures. He said that during that period, there was an impact on prices, which in turn affected sales volume. However, the impact was mitigated within a year or two as manufacturers cut costs and developed strategies to stimulate sales.

Farley also criticized the increased uncertainty caused by new tariffs imposed and threatened by Trump, including the 25% tariff on foreign steel and aluminum announced this week.

“We are working hard to run the company in a professional manner,” he said. “We are doing a lot of heavy lifting.”

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