Ford Motor Co. said profit will fall as much as 36% this year as President Donald Trump’s tariffs reduce earnings by about $2 billion, more than the automaker previously expected. 

Adjusted earnings before interest and taxes will be $6.5 billion to $7.5 billion, Ford said July 30, restoring guidance it had suspended in May over uncertainty surrounding Trump’s trade policies. That’s down from the $7 billion to $8.5 billion it initially forecast, and represents a sharp drop from last year’s earnings of $10.2 billion.

The update highlights how even Ford, which manufactures the most cars in the U.S. of any automaker, is being squeezed by new trade barriers imposed by the White House. Trump’s tariffs on imported vehicles, auto parts, steel and aluminum – as well as goods from key U.S. trading partners – have ballooned costs for Ford and its rivals.

Chief executive officer Jim Farley said the Trump Administration’s recent trade deal with Japan to lower tariffs to 15% from 25% has handed competitors such as Toyota Motor Corp. a large cost advantage over Ford, when Japan’s lower labor and currency costs are factored in. Ford’s Kentucky-built Escape crossover faces a roughly $5,000 cost disadvantage to a Toyota Rav4, and as much as a $10,000 handicap between a Japan-built 4Runner SUV compared to a Ford Bronco made in Michigan, he said. 

“It’s really meaningful,” Farley said in a Bloomberg TV interview. The company is working with the Trump administration “to minimize our tariff expense so that we can get more competitive.”

Ford’s shares fell 5% as of 5:02 p.m. in after-hours trading on July 30. The stock has gained about 10% this year compared with the S&P 500 Index’s roughly 8% advance.

Tariff Bill

Ford’s forecast of a $2 billion hit from tariffs to its full-year adjusted earnings is about $500 million more than earlier guidance. It factors in savings of about $1 billion from steps the company is taking to soften the blow from the levies.

The larger hit stems in part from Trump’s decision to double steel and aluminum tariffs to 50% from 25% previously, chief financial officer Sherry House told reporters. Those duties impact Ford because they raise costs for its material suppliers, which in turn pass those expenses on to the carmaker.

Another factor pushing up costs are tariffs imposed to curb the flow of fentanyl into the U.S. Those tariffs have stayed higher for longer than Ford expected, House said.

“The administration is aware of these multiple tariffs and is working with us to get this right,” House said.

The tally is just the latest to highlight fallout that volatile U.S. trade policies have created in the auto industry. General Motors Co. last week said tariffs cut its second-quarter earnings by $1.1 billion, part of an expected $4 billion to $5 billion impact GM expects for the full-year. Jeep-maker Stellantis NV on July 29 said import taxes will reduce earnings by about $1.7 billion this year.

Ford’s warning risks overshadowing a second-quarter profit that beat Wall Street expectations. Adjusted earnings were 37 cents a share in the period, better than the 33 cents analysts expected on average. Adjusted EBIT of $2.1 billion also topped estimates.