Ford CEO predicts huge industry shift after latest tariff developments | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

From the beginning, many economists warned that the full effects of President Donald Trump’s unprecedented trade war wouldn’t be felt until the second half of the year.

As U.S. companies finish reporting their first-half financial results, it’s clear that they have also felt the pain immediately, and it could get worse.

The auto industry has been especially affected by the tariffs.

Unlike other industries, the domestic auto industry has fully welcomed the tariffs, which were initially imposed at 25% tariffs on all imports.

The duties gave the Detroit Big 3 — Ford, General Motors, and Stellantis — a leg up on competition from Japan, Korea (and, to a lesser extent, Europe and the UK), which has been taking market share for decades.

“For decades now, it has not been a level playing field for us automakers globally, with either tariffs or non-tariff trade barriers,” GM CEO Mary Barra recently said.

U.S. carmakers are in a fight against Japan and Korea

While U.S. hallmark General Motors still has the highest U.S. market share at 17% and Ford ranks third with a 13% market share, foreign models from Asia round out the top five, according to Cox Automotive data.

Toyota ranks second with 15% U.S. market share, while Korean brand Hyundai ranks fourth with 11%. Toyota’s fellow Japanese brand, Honda, is fifth in the market, with 9%.

But the automotive industry is so globally integrated that the tariffs not only hit the materials used.

GM, for example, imports more than half of its U.S. inventory, despite being a U.S.-based company. Stellantis’ ratio isn’t much better.

Ford, on the other hand, makes 77% of its vehicles domestically.

Still, CEO Jim Farley sees tariffs irreparably changing the automotive industry for the long term.

Ford CEO Jim Farley predicts drastic, long-term industry changes due to tariffs

This week, Ford said it expects tariffs to cost the company $2 billion in 2025.

Ford, and every original equipment manufacturer (OEM), relies on imported parts to complete its vehicles, so even with a large manufacturing footprint in the States, tariff costs still add up.

The tariffs, plus Ford’s aggressive incentive spending, helped push the company into becoming the best-selling brand in the U.S. in the first half of 2025.

While the $2 billion tariff cost in the short term is worth noting, Farley seemed very cognizant of what the tariffs could mean in the future.

“That is a really important question to answer. We increasingly see Europe, North America, and Asia becoming kind of regional businesses with trade tariff rates that are aligned for those three or four regions. And I believe that is a very long-term change,” Farley said in response to a question about whether the tariffs were ever going away, even after President Trump leaves office.

“And the regions will pick them. So I believe this is quite a fundamental change.”

Farley went on to say that he and his team discussed this issue before the second-quarter earnings call started and concluded that “Everything seems to be changing in the car business.”

What comes next for Ford and the U.S. car industry

In addition to further balkanization, Farley is advocating for a renegotiation of the USMCA North American trade deal that President Trump introduced during his first term, only to summarily dismantle it during his second term.

Farley does not believe the tariffs are large enough to force major changes in manufacturing. But, he said, “These tariffs feel like, especially the ones in Europe and Asia into the U.S., feel kind of long-term for us.”

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The White House has given the auto industry a seat at the negotiating table from the beginning, and Farley hoped the administration would continue to listen, even while it cuts deals that undermine the stated goal of bringing manufacturing jobs back to the U.S.

“We’re having very constructive conversations with them, being the most American company you can imagine. But depending on how that works out, you know, this could actually reverse and we could get a sustained advantage being an American company. So stay tuned,” Farley said.