Al Root

Ford Motor is best positioned to weather President Donald Trump's steep tariffs on the automotive sector. That doesn't mean the company is out of the woods.

The Dearborn, Mich.-based auto maker reports first-quarter earnings on Monday evening. Investors expect to see solid quarterly results. They aren't as sure about what Ford will say about its financial guidance, though.

For the quarter, Wall Street projects an operating profit of $171 million, and breakeven per share on sales of $38 billion, according to FactSet. A year ago, Ford reported an operating profit of $2.8 billion, and earnings per share of 49 cents on sales of $42.8 billion. Ford had warned of a relatively weak first quarter in February due to reduced wholesale vehicle sales, and unfavorable product mix.

Still, Ford shouldn't have too much trouble matching or exceeding Wall Street expectations. First-quarter vehicle sales were solid, partly boosted by pre-buying by dealers looking to avoid tariffs.

Imported cars currently face 25% import levels. About half of the new cars sold in the U.S. are imports, mainly from Mexico, Japan, South Korea, and Canada. Ford only imports about 20% of the vehicles it sells domestically, but auto makers face tariffs on imported parts, too.

Tariffs threaten to wipe out billions in industry profits, according to Wall Street, and auto executives have been lobbying hard for some tariff relief. Some relief arrived. This past week, President Donald Trump listened, and altered some of his policies. Essentially, automotive-industry tariffs won't stack on top of other tariffs placed on things such as steel and aluminum. There also was a reduction in the levies on imported car parts.

Tariffs still bite. Following President Trump's adjustments, General Motors adjusted its full-year financial guidance. Now, it expects an operating profit of $10 billion to $12.5 billion. The midpoint of $11.3 billion is lower than prior guidance for $14.7 billion, down 23%. The new guidance includes total tariff impacts of $4 billion to $5 billion in operating profit. GM imports about 45% of the cars it sells domestically, mainly from Mexico.

Ford's 2025 financial guidance in February called for operating profit of $7 billion to $8.5 billion. If Ford took a similar hit to GM, it would send the midpoint down to about $6 billion.

That's a good number for investors to watch. Investors would probably see a cut to less than $6 billion as a problem. Higher than $6 billion and will qualify as a positive surprise.

Exactly what will happen, of course, is hard to say. Options markets imply Ford stock will move about 7%, up or down, following earnings. Shares have moved an average of about 9% following the past four quarterly reports. They have fallen three times and risen once over that span.

Ford stock was down 0.2% in premarket trading at $10.26, while S&P 500 and Dow Jones Industrial Average futures were down 0.8% and 0.6%, respectively.

Coming into Monday trading, Ford shares were up about 4% year to date, about seven percentage points ahead of the S&P 500, far outpacing peers. GM stock was down 15%. Stellantis shares were off 27%.

Ford management hosts an earnings conference call at 5 p.m. Eastern time to discuss results.

Write to Al Root at allen.root@dowjones.com

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May 05, 2025 07:44 ET (11:44 GMT)

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