After backing down on Mexico and Canada, a major tariff escalation presumably starts Monday.
Ford’s Warns Trump
The CarDealershipGuy reports Ford CEO warns automakers could lose “billions” if Trump tariffs take effect
Ford is bracing for a challenging 2025, cutting its earnings forecast to as much as $8.5 billion, down from $10.2 billion last year, as vehicle prices soften and the company absorbs the cost of launching new SUVs.
Beyond its financial pressures, Ford is now caught in a policy storm. The Trump administration is considering 25% tariffs on imports from Mexico and Canada, two key regions for Ford’s supply chain. CEO Jim Farley warns that the impact would be severe.
What Farley is saying:
- A 25% levy on goods from those countries would cost the company ‘billions and billions’ in profit and lead to industrywide layoffs, he told Bloomberg TV.
- He argues that U.S. automakers would be hit harder than foreign competitors importing from Asia and Europe, who wouldn’t face the same penalties.
- “There are millions of vehicles coming into our country” that aren’t subject to the proposed tariffs, he said on a recent earnings call. “We can’t just cherry-pick one place or the other, because this is a bonanza for our import competitors.”
Trump backed down from Mexico and Canada tariffs after getting minor concessions on border security that may not even be delivered.
But Trump has renewed his threats to reinstate them.
Auto Industry on High Alert
Also from the CarDealershipGuy please consider Trump’s new tariffs put the auto industry on high alert
President Donald Trump’s plans to impose stiff tariffs on Canada, Mexico, and China has left the auto industry in the middle of a trade dispute. And many of those likely to be affected by the measures, are weighing in.
[Update 4:57 a.m. EST February 4] First things first: The sweeping tariffs, which started on Tuesday, February 4, will require China to pay a 10% duty on their goods and services.
[Update: 4:52 a.m. EST February 4] China wasted no time hitting back after new U.S. tariffs took effect Tuesday. Starting February 10, China will put an extra 15% tariff on U.S. coal and liquefied natural gas imports. American crude oil, agricultural machinery, and certain cars will see a 10% tariff hike.
[Update 4:47 a.m. EST February 4] Late on Monday, February 4, Canadian Prime Minister Justin Trudeau and President Trump reached an agreement to pause the 25% tariff on Canadian imports to the U.S. for 30 days. As part of the negotiations, Canada will send 10,000 frontline workers to the border and appoint a “fentanyl czar” to help stop the flow of the illegal drug.
[Update 11:37 a.m. EST February 3]: Mexican President Claudia Sheinbaum announced this morning that the U.S. agreed to delay tariffs for one month after she committed to deploying 10,000 troops to the border.
- Canada is set to take a bigger hit from the tariffs, with about 75% of its exports heading to the U.S., compared to just 13% of American exports going north.
- In terms of motor vehicles and parts only, roughly 90% of exports from both Canada and Mexico are imported to the U.S., according to the Mexican Automotive Manufacturers’ Association and the Canadian Vehicle Manufacturers’ Association.
- In 2023, Mexico exported $153 billion in motor vehicles and car parts to the U.S. while Canada exported $58 billion, per Census Bureau data.
The levies have drawn a barrage of public criticism from those with deep ties to the industry.
- Matt Blunt, President of the American Automotive Policy Council, which represents Ford, GM, and Stellantis, said the tariffs undermine the billions invested in domestic and regional content requirements, raising the cost of building vehicles in the U.S.
- The IAM Union, which represents 600,000 Canadian workers in the manufacturing sector (including automotive), stated the tariffs will lead to job losses, increased prices, and other negative impacts.
- China said it will file a lawsuit with the World Trade Organization regarding the tariffs and will “take necessary countermeasures.”
On March 2, 2018 I posted Trump Tweets “Trade Wars are Good and Easy to Win”
If trade wars are good and easy to win, Why didn’t Trump win them then?
And please note that Biden kept intact all of Trump’s tariffs and even added some.
The Tariff Lobby
Given that Trump himself is “The Tariff Lobby” his Truth Social post is a bit ironic.
As for “worth the price that must be paid”, then why the hell did Trump back down?
“Trump Blinks on North American Tariffs”
On February 3, I asked “Trump Blinks on North American Tariffs” Agree or Disagree?
Trump’s Bravado Lasts One Day
Yesterday, Trump defended his tariffs, saying in an all-caps post: “Will there be some pain? Yes, maybe (and maybe not!)” He added that “it will all be worth the price that must be paid,” and repeated a call to turn Canada into America’s 51st state.
Well that was a fast turnaround wasn’t it?
All Trump proved is that he is willing to break any deal he makes only to back down if the market objects.
On January 31, 2025 I commented Seven Charts Show Tariffs Would Harm the US Auto Industry
The CATO institute does a great job explaining why tariffs on Canada and Mexico would be a very bad idea.
Trump Announces Reciprocal Tariffs Next Week
Yesterday, I commented Trump Announces Reciprocal Tariffs Next Week, a Major Trade War Escalation
Trump announced no details, but I believe I have a good idea of what he means. Many charts tell the story.
Trump told Republican lawmakers of his plans during budget discussions at the White House on Thursday, three sources familiar with the plan told Reuters. Trump and top aides have said they plan to use higher tariffs on foreign imports to help pay for extending Trump’s 2017 tax cuts, which independent budget analysts say could add trillions of dollars to the U.S. debt.
I discuss the China, Vietnam, Mexico connection.
Imports from China Understated
To understand how tariff avopidance works, please see The US Trade Deficit with China is Understated by as Much as 30 Percent
Normal trade math does not add up. US imports and China exports are not in sync.
I asked Brad Setser, senior fellow for international economics at the Council on Foreign Relations, and Director of International Economics, for the United States Department of the Treasury to comment.
Setser replied “Chinese exports started exceeding US imports only in those categories with tariffs, and only after the tariffs were imposed.”
To stop that circumvention, Trump now threatens the world. My lead image shows what the result will be.
Silly Question of the Day: When were the times certain, Mish?
Response: Never and I never said so. In fact I have said otherwise.
But do you deny that Trump doing and quickly undoing actions, is threatening allies to an extent never before, taking clearly unconstitutional actions, and breaking treaties with no legal right to do so, adds greatly to uncertainty and apprehension?
I think Yardeni has the better take, but you get what you pay for.
Does Trump think he is subsidizing the grocery store when he buys ground beef?
JUST DEW IT, put up or shut up……
Pass them tariffs , call his bluff. After all, if a bully punches you, and you don’t do anything, he’s just gonna punch you again.
I am tiring of Trump’s spineless tariff bluffs. C’mon tariff man. Quit backing down. Show us that tariffs work. Lower our trade deficit. Pay down the debt. Create millions of jobs. Make us all rich.
I hope Trump’s tariff announcements this week are significant and more importantly, actually get implemented. We need some real world evidence that tariffs will do all the things he says they will.
Wait!!! Did I miss something? Trump’s China tariffs are live. How did he bluff? Did you really think he was going to start out at 60%?
As for Mexico & Canada, they blinked, not Trump. As for “eventual” outcomes, these take time, right?
Oh, I got it. You’re doing sarcasm ; )
Nope. I truly want Trump to do what he promised. Put tariffs on every country and every thing. It’s not an academic exercise that we argue endlessly about. It’s a real world experiment to see if tariffs will do everything he said they would do.
Bring back manufacturing.
Bring back jobs.
Allow us to eliminate income taxes.
Pay down the annual deficit.
Pay off the debt.
Make us rich.
Usher in the new “Golden Age”.
I want to see this play out. Then we will know if tariffs work as he says.
Sadly, so far, Trump is the one who “blinked”. How can we get to the Golden Age if he keeps wimping out and backing down?
Oh. I forgot. You’re one of those who takes Trump at his literal word. But of course you don’t. You just like to make fun of him in a backhanded sort of way.
The first two are certainly doable but will go well beyond just tariffs to achieve.
3-6 are just hyperbole, Trump yammering as he always has and always will, but again like my initial point, you already know this to be the case but somehow want to act like he’s REALLY being serious.
The last point about the Golden Age could come to pass, but everyone will have a different interpretation of that looks like. Most people would assume it goes beyond economics into social issues as well.
Like anyone here on Mishtalk, you & I both know that Trump isn’t going to be a uniter any more than Obama and Biden were. But that’s okay. Between Clinton, Obama, & Biden, the left made lots of headway in building a liberal deep state across all aspects of American life. Now, it might be the conservatives turn to do the same thing.
I sure hope so! MAGA!
Trump will announce tariffs on steel and aluminum this week. Hopefully more to come soon! MAGA baby!
C’mom tariff man! Keep going!
JayW doesn’t believe in you like I do.
The month grace period is not over yet.
I agree. The point has been made & both countries are going to step in line pretty well.
However, the next shoe to drop is cartel violence along the border with Mexican & US troops and certainly CBP.
When this happens, things are going to start to get real, and it may not take long for their to be a cartel backed terrorist attack on the US.
And like COVID, this will be Biden’s worst legacy. He flung the doors open to 12M illegals, with untold numbers connected to the cartels who are savages. They’re cells all across the US waiting to do carnage. I certainly hope this doesn’t happen, but there’s a very real possibility that it could happen.
And the blame will fall on Joe Biden’s for allowing open borders for 4 years.
Every month that Trump delays tariffs on Mexico and Canada, is another month that they have time to prepare, plan and find alternative sources.
If he truly wants tariffs, what is the point of delaying them?
What happens to the North American auto industry if the public realizes they can buy very nice, advanced Chinese cars for $20K?
How long can 130K, $100K/yr + $14K bonus, UAW workers hold 350 million people hostage to their widely overpriced cars?
Just judging by comments in videos about cars, more people are asking: Why can’t we have Chinese cars?
Take a look at Huawei’s FSD system. Better than Tesla’s?
This video is from a car YouTuber who owns several Teslas & he uses Tesla FSD.
He has an informed opinion: https://www.youtube.com/watch?v=VuDSz06BT2g
So the goal then is not to return manufacturing to the US. Got it.
The ban did Huawei a great favor. Now it makes network gear, mobile phones, and full self-driving software.
Huawei’s FSD was a real eye-opener for me.
Tesla & it’s ecosystem of fan-boys would have you believe no one is even remotely close to Tesla’s FSD.
Totally not true!
I’m curious how the Huawei situation will affect Tesla’s stock.
Wallstreet needs to re-evaluate the huge multiple they gave Tesla stock based on their FSD & AI.
“Why can’t we have Chinese cars?”
You can, but the only minor problem will be GM, Ford & Dodge / Jeep going out of business and laying off 900K employees. Granted, this wouldn’t happen overnight, but it would happen as time passes.
Wouldn’t happen overnight ??????? it’s been happening over night, every night for the entire 40 years since I left GM and Michigan behind.
The cartoon above shows a worker getting blasted. But it’s not the workers getting burned. It’s the employers that get torched. Then they have to lay off the workers. You have to save one to protect the other.
Um, I can’t say that I disagree with anything you’re saying, but Detroit has never faced cars being sold here in the US on the scale China could bring to here that are half the price of what they sell. At most, when Kia & Hyundai initially started making vehicles in the US, they definitely had lower prices than their US counterparts but not half price. Nowadays however, the Kia & Hyundai made in the US aren’t really that much cheaper. H &K’s only real differentiator are that they still sell sedans.
If Chinese EVs are allowed to flood the US market, Ford, GM, Dodge & Jeep will all go out of business. What part of that is hard to understand? And we can say this much, China won’t be selling EVs in the US while Trump is president, so rest assured you’ll have to wait at least 4 more years.
This scenario is no different than healthcare, including pharmaceuticals. Americans are forced to pay more for these really big-ticket items, because we, in general, can afford to do so. The entire system is setup to overcharge us, in large part due to profuse overspending on the part of the government. It’s that simple. I don’t like any more than you do. Same thing goes with housing, insurance, etc. You don’t get lower prices, when you’ve gone 15+ years without a real recession.
Maybe Trump will have some success with changing things. I just know had we elected Comrade Kamala, we sure as well wouldn’t have stood a chance at seeing meaningful change happen.
I get the impression that you’re saying price should be related to ability to pay, not cost plus profit. Back to school for you.
No. I’m just saying our system is built to maximize profit. And when Uncle Sam spends 40% more than it takes in, then that creates a lot of extra profit that unfortunately isn’t shared with the bottom 50% all that much.
Just think USAID in terms of the entire economy.
Trump may yet collapse North American vehicle manufacturing.
You may get cheap Chinese cars a whole lot sooner than you thought.
Greg, Trump will not allow Chinese vehicles to imported into the US without massive tariffs. That’s a fact, but you’re free to think / live in some alternate reality.
– What happens to the North American auto industry if the public realizes they can buy very nice, advanced Chinese cars for $20K?
> Well for starters, the Automaker’s will have to “Finally Realize” that the time for Unions is long over. You can’t pay “Very High Wages AND Benefits” for “Very Low Work Effort” and expect to survive, because you won’t! It’s really that simple, as we are entering an age of “Value for $$$” with few (personal) exceptions.
– How long can 130K, $100K/yr + $14K bonus, UAW workers hold 350 million people hostage to their widely overpriced cars?
> Until it can’t and so it won’t, and that “Time Is Now”
I came from a Union Family, and have watched most go away. Can’t compete in todays markets with newer technologies. Look at EV’s as a perfect example. Most educated H.S. Children (what they are) can be trained to build, on most production lines, for EV’s in weeks if not days in many instances. Robotics, Assembly Lines, and VERY Little Human Interaction necessary at all!! It’s been around for years, but American Corporations held out for obvious reasons. Problem is, that they had no “Back Up Plan” in place, designed and paid for. Now they are crashing as a result. It’s called “Greed!!!
Don’t blame Trump and His Administration or Other Countries, as it’s our own “Greed” and thereby “Decision Making” by not understanding and realizing or simply refusing to give up anything. Now as a result, many have and many more will, give up Everything. A great lesson in Business Survival!!
I AGREE WITH THE GREED ELEPHANT IN THE ROOM.
And the worst GREED industry is healthcare. My dad told me about a friend who fell off a ladder and hit his head and hurt his arms. He was only in the hospital for 4 hours & no surgeries.
They billed Medicare $60K with the poor guy having to pay 20% of that. Thay’s GREED pure & simple.
Ford is taking heavy losses on its EV operation. Customers at other divisions are indirectly subsidizing cars very few want. If Ford shut down its Ford-e division, they could more than offset the increase in tariffs on ICE vehicles customers really want.
Beat me to it.
You must be one of those MBA types who forget that a company like Ford must hedge technology risk and stay in the EV game. Your suggestion makes sense only if Ford has a 10-20 year time horizon.
“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”
~Frederic Bastiat
Cry me a river. All of them overproduced autos, then started the financing scheme, then leasing all to keep demand artificially high. Oh, and the schemes about “depreciation” the second a new buyer drives off the lot even if the car was used to test drive earlier. Whole industry is a scam that needs some pain.
Ford will reshore manufacturing or go out of business. I have not seen a Ford sedan in years because Detroit quality pales beside Japanese and German engineering. Henry Ford invented the V8 engine because a V8 is dynamically balanced. He could mass produce ill fitting parts of different weights and tolerances. The engine would run and sound good but it lacked power and chewed itself up at ~80,000 miles. Along came small four cylinder Japanese engines with the same power that lasted 200,000 miles. Ford never learned how to design quality. Planned obsolescence is the Ford philosophy. I have yet to have someone brag about the Ford they have owned for a reliable ten years. I owned my Japanese car forty years and the engine spins out to 7,000 rpm as required.
German engineering is not that great. Yes, BWM, Audi and Mercedes all go fast and look fabulous but none are very reliable (consumer reports will tell you this) and all cost a fortune to repair as soon as they are out of warranty.
I’ve owned an Audi and a BWM and I can tell you for a fact they weren’t any better than the GM or Ford vehicles I’ve owned in terms of reliability.
On the other hand the Japanese vehicle I’ve owned and ones my friends have owned have all been very reliable mechanically and more importantly, very cheap to repair when there was a problem.
My experience also.
In Nov 2008 Ford was $1.01. In Mar 2009 Ford was $1.52, thereafter it popped to $18.
In what seems to be the most desperate attempt to date to stop DOGE, another corrupt liberal judge issued a ruling today that states neither DOGE nor Treasury Secretary Scott Bessent can access Department of Treasury data! Lol.
No law or logic was cited by the judge of course, because none exists. Basically the corrupt judge is trying to forbid the elected government from accessing information about budget and finances.
These are obviously “the primal screams of a dying regime.”
I believe the impeachment of judges will follow soon enough.
How can anyone act like a $236B trade deficit with the two countries we share borders is a good thing?
It’s not and Trump should be doing everything he can to move this deficit as close to zero as he can in the next 4 years.
Do you prefer free markets or central planning like socialism or communism? You can’t have both. No one is forcing Americans to buy stuff from Mexico or Canada, people are choosing that all on their own.
Clearly JayW either can’t think or is afflicted with TDS type II because we have gone over this many times.
No, I refuse to listen to your opinions. It’s okay that people disagree with you. You don’t have some crystal ball.
And the worse limitation of your “economic” thinking is that America will solve our trade problems through “free” trade. ROTFLMAO!!!
You keep writing the same stuff OVER & OVER hoping you’re going to be right. We waited for 12 months for a recession to hit that you said was there. Finally, you stopped harping about it.
Remind me. Where are there free markets?
CEOs from Ford & GM force Americans to buy cars made in Mexico, because they’re cheaper to manufacture there.
We can’t compete with Mexico or Canada any more than we could compete with Chinese made EVs.
America can’t manufacture cars competitively anymore. I wonder why?
I already explained why, multiple times.
Economic illiterates refuse to listen.
I agree. You’ve explained multiple times. Probably 10 times more than you should have. And just because you can’t stop explaining why doesn’t make your opinions true.
Hey JayW, you made your point, move on or move away; you don’t have to stay here and annoy the rest of us who appreciate appreciate the opportunity to think.
John, just hide my posts like I did with FAKE President Musk.
You’re wasting your typing skills.
Thanks!
We’ll plan and control the economy from here on out, none of this will matter then.
I think a fundamental problem with eliminating the trade deficit is with the dollar as a reserve currency, the only way it can be maintained is continual trade deficits exporting USD.
Stop that, and we’ll have a currency crisis from abroad.
Many years ago, I thought Mish had discussed this issue.
Personally, I’m less concerned about trade deficits than I am about the US moving strategic goods away from China:
Pharma
Rare earth metals
Electronics
Solar panels
Batteries
The devil is in the details so we still have to wait and see.
Ford ceo was fully committed to EV. Now he blames Trump for his losses.
The US and Canada might be united one day like the EU or the UK, plus Greenland, free for every citizen to move around and to protect us from the polar bear and China. The trade deficit with Canada will be eliminated. The trade deficit with China will be cut. Rare minerals, oil and gold will be extracted ==> to make America greater !
The auto companies have pillaged consumers with ADM’s, etc. and Ford in particular has been a significant offender. I hope they stay in business but that their stock prices get cut by 90%. Unfortunately employees will suffer but it is time for these companies to learn a lesson.
The only reason they are in business is government bailouts, I rank them way down at the bottom with the airline industries shameful existance.
Agree. Farley cost Ford about $5 billion due to their EV fiasco.
GM, Toyota, etc. have been charging ADM’s. Even a decently Subaru Forester is 40k, a Forester! Can find Ford and Jeep for 100k. No mercy for any of them. Ford dealers are marking 25k off of some Bronco’s.
Ford has much bigger issues than tariffs. They are trading at less than half of their early 2022 peak while the market had gone on to multiple ATH’s.
But why self reflect on your EV bungles and poor execution when you can blame it on Trump’s tariff’s.
There is a great story on NY Times about Europe’s planned playbook for Trump’s tariff. Seems they were planning from last year before he even won.
https://www.nytimes.com/2025/02/07/world/europe/eu-tariffs-trump.html
Go get’em tiger!
“Cry Havoc! And let slip the tariffs of trade war!”
Mystery that you write a post like this. There are no Tariffs on Canada & Mexico. Auto companies and others will raise prices. There will be no red ink.
It’s a mystery how some people cannot read or think.
Trump has threatened to put those tariffs back on the table, something I pointed out, and he is foolish enough to do it.
Nothing wrong with these tariffs that a few more tariffs can’t fix.
We’re going to start putting tarrifs on the tarrifs.
Love it. Hope Trump voters enjoy their $12 eggs and $100K Ford Pickup trucks.
That’s nonsense. All of this started a few years ago, especially with the vehicle prices.
When all that free money got printed, and interest rates were 0. Back when Trump was handing out stimulus checks like candy.
We’re working tirelessly to bring it all back so you can blame it on the next president!
Anyone that thinks Trump or Biden alone is the cause of these problems is sorely mistaken.
Biden is a space alien pedophile. Of course he’s to blame!
The irony is that there is a new pandemic sweeping across the country. Cows, cats, and birds are all catching H5N1 or whatever it’s called now. The thing is mutating fast.
Can’t wait for new Health Secretary to issue horse meds.
We’ll be issuing BirdfluCoin, which will keep the virus away if you buy enough of it.
It seems all these threats might backfire into job losses and higher prices to all the sides.
Time will Tell
Business hates uncertainty and delays investing. Even if it’s only intimidation with no outcome, just knowing that by the stroke of pen everything can change drastically is plenty too much risk.
btw from what I’m told the people we are catching at the border are fleeing the US into Canada at the moment. We’ll be sure to transport them back.
“Business hates uncertainty and delays investing. Even if it’s only intimidation with no outcome, just knowing that by the stroke of pen everything can change drastically is plenty too much risk.”
Bingo
When were the times certain, Mish?