Ford's $900 Million Tariff Surprise and Strategic Pivot
Carmaker Ford disclosed on Tuesday that it incurred an unexpected $900 million in additional tariffs during the previous year. This financial blow stemmed from a last-minute alteration to a tariff relief program by the administration of former US President Donald Trump, as reported by the BBC.
Tariff Relief Program Changes Impact Ford
The tariff relief initiative was originally designed to assist automotive companies in mitigating import duties. It permitted firms importing car parts but assembling vehicles within the United States to apply for credits, thereby reducing their overall tariff expenses. However, a sudden modification to the regulations significantly increased Ford's costs.
In December 2025, officials from the Trump administration notified Ford that the relief policy would be implemented later than initially planned. This delay resulted in the automaker receiving fewer credits than anticipated. Jim Farley, Ford's Chief Executive Officer, revealed that the company ultimately paid approximately $2 billion in tariffs for 2025, nearly double its expectations. Farley attributed these elevated costs directly to the unforeseen changes in the tariff credit system.
This higher-than-expected tariff bill underscores the persistent uncertainty confronting car manufacturers as they navigate increasing import taxes and advocate for governmental relief or exemptions.
Ford's Strategic Shift Away from Electric Vehicles
In a separate development, Ford previously announced a substantial $19.5 billion charge following its decision to retreat from aggressive electric vehicle (EV) manufacturing. This charge was a primary contributor to the company's $11.1 billion net loss in the fourth quarter, based on its calendar-year financial reporting cycle.
The automaker cited regulatory changes under the Trump administration and tepid market demand as reasons for abandoning plans to produce large EVs. Ford stated that the business rationale for heavily investing in EV production, particularly for larger models, had "eroded."
Instead, Ford plans to redirect investments toward manufacturing profitable hybrid and gasoline-powered vehicles, alongside smaller, more affordable EV models. This strategic realignment mirrors a similar announcement by General Motors in October 2025, which also scaled back its EV ambitions due to faltering demand, incurring a $1.6 billion hit.
Quarterly Earnings Miss and Production Challenges
According to a CNBC report, Ford posted its most significant quarterly earnings miss in four years, with results announced on Tuesday. The company expressed optimism that 2026 would be a recovery year. The earnings shortfall was largely driven by the unexpected tariff costs and delayed credits, causing Ford's fourth-quarter profit (EBIT) to drop from an anticipated $7.7 billion to $6.8 billion.
Sherry House, Ford's Chief Financial Officer, noted that earnings were further impacted by fires at a Novelis aluminum plant in New York last year. This facility supplies aluminum for Ford's highly profitable F-Series pickup trucks and is not expected to fully reopen until mid-year, adversely affecting production and profitability.
BYD Overtakes Ford in Global Sales Rankings
Ford faced another setback as China's BYD surpassed it in global vehicle sales for the first time, as reported by Bloomberg. The US automaker's global shipments declined by nearly two percent last year to just under 4.4 million vehicles, falling short of BYD's 4.6 million sales. Consequently, BYD has ascended to become the world's sixth-largest automaker, moving ahead of Ford in the global rankings.
Although Ford experienced sales growth in the United States, it lost market share in Europe and particularly in China. In China, domestic brands such as BYD, Xiaomi, and Geely are attracting customers with more affordable and technology-centric electric vehicles, diverting sales from foreign competitors like Ford.
