Introduction
Ford Motor Company has announced price hikes for three of its models produced in Mexico, starting May 2nd, becoming one of the first major manufacturers to adjust catalog values following President Donald Trump’s tariffs.
Price Adjustments
The electric SUV Mustang Mach-E, the Maverick truck, and the Bronco Sport will see price increases of up to $2,000 for certain models, according to a notice sent to dealerships and reviewed by Reuters.
Impact of Tariffs
Ford stated this week that the trade war would add approximately $2.5 billion in costs by 2025, but they expect to reduce this exposure by about $1 billion. The company aims to mitigate the impact through price adjustments and other measures.
Ford’s competitor, General Motors, previously mentioned that tariffs would cost them between $4 billion and $5 billion due to heavy import duties on foreign car imports. However, they anticipate offsetting at least 30% of these costs.
Details on Price Increase
A Ford spokesperson confirmed that the price increase will affect vehicles manufactured after May 2nd, arriving at dealerships by late June. The spokesperson added that the adjusted values reflect typical mid-year pricing adjustments, “combined with some tariffs we are facing.”
“We have not passed on the full cost of tariffs to our customers,” they further stated.
Market Reaction
Ford’s stock decreased by less than 1% during morning trading. The automaker is still executing a weekend-long discount program for many of its models leading up to the July 4th holiday, according to the spokesperson.
Trump’s tariffs have caused weeks of uncertainty across the automotive industry, prompting major US and European manufacturers to withdraw forecasts, alter production, and halt plant operations.
After industry-wide resistance, Trump softened tariffs on foreign car parts to provide credits to manufacturers for US production and avoid double taxation on manufacturing inputs. However, a 25% tariff remains on the 8 million vehicles the US imports annually.
Analysts predict that US car sales could decline by over a million annually if tariffs persist. Ford is better positioned to withstand tariffs compared to some competitors due to its strong US production base.
Ford assembles 79% of its US-sold vehicles in the United States, according to Barclays analysts, compared to GM’s 53%. Nonetheless, Ford imports the popular and affordable Maverick from Mexico, like many other large US automakers facing significant price hikes for their budget models produced domestically.
Both Ford and GM also face substantial tariffs on imports from China and South Korea, respectively. GM estimates its Chinese import costs at $2 billion, while Ford has not disclosed expenses related to Chinese vehicle imports.
Key Questions and Answers
- What is the reason for Ford’s price increase? The price hike reflects typical mid-year pricing adjustments combined with tariffs faced by Ford.
- How much will the prices increase? Prices for certain models of the Mustang Mach-E, Maverick truck, and Bronco Sport will rise by up to $2,000.
- What impact do Trump’s tariffs have on the automotive industry? Tariffs have caused uncertainty, prompting manufacturers to withdraw forecasts, alter production, and halt plant operations.
- How is Ford positioned compared to competitors regarding tariffs? Ford’s strong US production base puts it in a better position to handle tariffs compared to some competitors, despite importing popular and affordable models from Mexico.
- What are the tariff implications for other automakers? Both Ford and GM face significant tariffs on imports from China and South Korea, respectively.
