Consider This from NPR - Ford CEO does the math on Trump's auto tariffs

Episode Date: May 1, 2025

Americans are rushing to car dealerships as they worry about what President Trump's tariffs will do to car prices in the coming months. New vehicle sales have been increasing steadily this year, and they jumped in March, according to market research firm Cox Automotive. That's the month when President Trump announced upcoming auto tariffs. Shoppers are racing to buy cars this spring because they believe that prices are going to go up in the summer and fall. And experts say if tariffs remain in place, that's likely. It's a gamble President Trump is making – with the hope his tariff strategy will lead domestic car companies to make more vehicles at home. NPR's Mary Louise Kelly talks with Ford Motor Company CEO Jim Farley, who was at Ford's Kentucky truck plant, about Trump's tariffs, and Ford's future.For sponsor-free episodes of Consider This, sign up for Consider This+ via Apple Podcasts or at plus.npr.org.Email us at [e-mail] more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hey, it's Juana Sommers. A quick note before we start the show. When you listen to Consider This and anything else from the NPR network, you're listening to public media, meaning it serves the public with nonprofit independent journalism, the shows you love, and the conversations that keep you company. There are a whole lot of ways to get your news, but public media is unique. It is accountable to you, freely accessible, and full of voices and stories you cannot find anywhere else.

Today marks the start of public media giving days. When you give, it's more than a donation, it is a declaration that public media is a vital resource worth sustaining. If you don't give already, this is the time. Visit donate.npr.org. Thank you. Americans are rushing to car dealerships as they worry about what President Trump's tariffs will

do to car prices in the coming months. New vehicle sales have been increasing steadily this year, and they jumped in March, according to market research firm Cox Automotive. That's the month when President Trump announced upcoming auto tariffs. Here's Kyra Nye, a children's librarian in Ohio. She wanted to swap her 2008 Toyota for something bigger. She and her husband were hoping to put off that purchase till next year. But with the tariffs and so much of the uncertainty about that, we just decided that we couldn't wait any longer. Nye told our colleague, Kamila Domenoski, that when her family headed out to a car lot in March,

they realized maybe they weren't the only ones. The dealership was packed. Kira Nay and other shoppers are racing to buy cars this spring because they believe that prices are going to go up in the summer and fall, and experts say if tariffs remain in place, that's likely. It's a gamble President Trump is making with the hope that his tariff strategy will lead domestic car companies to make more vehicles at home.

We don't need the cars from outside. When they say, oh, sir, we want to send you a lot of cars, I said, we really don't want your cars. We really don't want. We want to make our own cars. Consider this. President Trump says moving auto production to the U.S. will create jobs for Americans, but that has put automakers in a bind because covering the costs of manufacturing

cars here could mean raising prices for consumers. From NPR. President Trump tweaked his tariff strategy this week, giving automakers some reprieve as they work to shift production to the U.S. They took in parts from all over the world. I don't want that. I want them to make their parts here. But I gave them a little bit of time.

Ford Motor Company CEO Jim Farley welcomed that move, but he also acknowledged that the tariffs are creating a lot of uncertainty for the industry and for consumers. Farley spoke to my co-host Mary Louise Kelly earlier this week calling in from a truck plant in Louisville, Kentucky. Well I want to ask you more about the plan in a second, but let's just go straight to the news of President Trump saying he will walk back some tariffs. You put out a statement welcoming the move.

Just briefly explain why. Well, Ford is the most American company. We make 80% of what we sell in the U.S. here. And so the tariffs for us are a bit different than the industry. The U.S. industry is about 17 million units and 8 million of that, here and so the tariffs for us are a bit different than the industry. The US industry is about 17 million units and 8 million of that about half are imported through ports around the country and half is built in the US. So the tariffs

will have a really big impact in our industry because 25% cost increase for 50% of the vehicles sold in America. So you're saying Ford already makes 80% of your cars in the US, that's more than any other US automaker. I want to ask about the parts though, because a lot of the parts you use to build those cars do come from other countries, Mexico and so on. Will you be shifting to US based suppliers? On average our localization of the parts, as you said, is around 75%.

That's either USMCA compliant parts coming from Mexico or Canada. During Trump 1, we negotiated USMCA, where even a part made in Mexico could have a lot of US content in it. So the 75% I mentioned is visualized in F-150. 75% of the parts either come from the US, about half, and the rest are coming from those other countries, but they have a lot of US content as part of that. I guess the central question here, if the administration's stated goal with easing these tariffs for now is to give automakers like you time to shift production, how do you decide whether or not to do so when the tariffs themselves are a moving target, when President Trump changes mind again in two days?

So what the Trump administration did yesterday to make it simple is they gave all the automakers, Ford's in a different spot as I said, about a 15% leeway on parts that are non-USMCA or non-US. So they're giving us kind of an exemption for carpets, washers, fasteners, wiring looms, stuff that honestly we can't even get in the US. And also stuff that frankly if we made here it would make the car a couple thousand dollars more expensive which is too expensive for what we think. So does that stuff stay overseas? You'll continue getting that from overseas? No, I mean we'll continue to do the math and aggressively move localization but the one thing we have to balance is affordability. The F-150 is

$800 a month already and it's America's best-selling vehicle. Do we want to make that $850 a month? You know and that's the balance between affordability and making a hundred percent of the parts here or you know keeping as as is. I nodded to the big question on a lot of ordinary Americans minds are the prices of our cars about to go up? Will prices still have to go up even with this at least for now scaling back of some of the tariffs? I think it's inconceivable to say that car prices won't go up. Why? 50% of all vehicles bought by Americans are imported and those imported cars will get a 25%

Tariff now that is literally five to ten thousand dollars a vehicle So for the importers and actually some of those companies are local companies You know some of our competitors that are domiciled in the u.s. And they have big decisions to make because their tariff bill will be very large compared to Ford. And how about it for you at Ford? We only import about 10%, something like that. And so for us, we have 6 to 10% margins, 25% tariff on the parts that we don't build in here, like 20% of our vehicles, you know, is billions. But we can offset that and it depends how our competitors

act. Will the overseas importers, you know, increase prices and allow us to gain market share and therefore, you know, build even more here and be able to more than offset that in terms of the price that we would have to take? I don't know. It will all come down to this summer when those increased prices may or may not happen and Ford deciding what do we do about that competitive dynamic. So I'm trying to pin you down on this.

If the basic question is, are Ford prices going to go up? It sounds like the answer is we don't quite know yet because there's so much uncertainty in your industry. I would say that's the right answer. You know, we announced today actually, I can announce it right now, that we're extending employee pricing through July 4th. We want to enter this period of uncertainty by reassuring Americans if you buy a Ford, you don't have to worry about that, at least through July 4th.

And I mean, I can hear the factory floor and the supply line behind you. Just paint me a picture of a year from now how different things might look. Because I'm wondering, you know, if you're looking at, for example, jobs, another stated goal of these tariffs is to provide jobs for American workers.

What a lot of the work say at the Kentucky plant where you were speaking with us from already be automated, be robots, be AI. A year from now, I don't know what's going to happen, but I will know what's happening at Ford. We're building two brand new plants for expander hybrid and electric lineup. I think that Ford, because of the tariffs, were the best position. For many years, we built 80% in the US,

and we had much higher costs than our competitors importing overseas. Well, that will start to change now, and I believe in Ford's case, this is a pretty big opportunity for us. Last thing, Mr. Farley, I know that you have spoken directly to the president about these tariffs. What did you learn from those conversations?

Well, what I learned is that I think he is very committed to building more jobs like these in America. I mean, these are the best of the best, you know, hourly jobs you can find in America. He's very committed to that. But I think the issue that we all have to work through together is how fast can that change

and what will be the pricing and the affordability that we can manage through that transition. Would more predictability be useful for your business? Well, sure, cost increases are not great for any industrial company. On the other hand, we have committed to the U.S. We want to expand jobs in the U.S. And so it's a balancing act between affordability and these great jobs. And I think I would just say there's no quick answer here.

This is a long term policy change and we have to work together through it, even the most American companies like Ford. That was Ford CEO Jim Farley speaking from a truck plant in Kentucky to my cohost, Mary Louise Kelly. And a point of clarification. Jim Farley said about half of the F-150's parts come from the US. It's actually closer to 60 percent according to Ford. This episode was produced by Alejandra Marquez-Honse with audio engineering by Simon Laszlo Jansen. It was edited by John Ketchum and Sarah Handel with help from Camila Domenosky.

Our executive producer is Sammy Yenigan. It's Consider This from NPR. I'm Juana Sommers.