One significant difference between Donald Trump’s first term and his second is the sheer amount of acquiescence and knee-bending corporate America appears willing to do in response to his norm-breaking behavior. But at least one major American executive is starting to crack under the pressure of the Trump tariff regimen: Ford CEO Jim Farley is ringing the alarm bells for the American automakers, warning that the impending penalties on imports are going to put a hard squeeze on the industry.
While speaking at a Wolfe Research conference in New York on Tuesday, Farley said that Trump’s policies have so far led to “a lot of cost and a lot of chaos.” Trump has repeatedly talked up the automotive industry, going so far as to claim he “saved” it during his Inauguration address, but Farley warned that he just might end up tanking it: “Let’s be real honest, long term, a 25% tariff across the Mexico and Canadian border would blow a hole in the US industry that we have never seen,” he said.
As Farley pointed out during his appearance at the conference, the tariffs have a double-whammy effect on American vehicles. First, it hits automakers importing materials, which it would inevitably pass on to consumers. But it also means that rival manufacturers including Korean, Japanese, and European companies would not be subject to the same costs, allowing them to be considerably more competitive in pricing. Farley said it would be “one of the biggest windfalls for those companies ever.”
This is a bit of a change of pace for Farley, who prior to Trump taking office, seemed confident that things were going to be great. Ford donated $1 million plus some vehicles to Trump’s inauguration to grease the wheels, and Farley basically shrugged off Trump’s tariff threats in December when they were just a theoretical threat. “After 120 years, we’re pretty experienced with policy change,” he said at the time, insisting “Ford is very well-positioned” to weather any storm.
Fast forward to February and it turns out the storm is worse than Farley predicted. He warned that his company is likely looking at some major layoffs if Trump’s proposed tariffs take effect and said the impact would be “devastating” to the industry as a whole.
Other automaker executives are trying to keep their composure about the situation. At the same conference, GM CEO CEO Mary Barra said her company could mitigate as much as half of the new costs created by tariffs and the company is “prepared” for the next steps that may follow. But Farley seems to be losing his cool, and he certainly won’t be the last exec to publicly start sweating as Trump turns up the heat.
