Ford (F) CEO Jim Farley sounded off on President Trump’s tariff plans — but not in the way many expected.
During Ford’s Q4 earnings call yesterday, Farley warned that prolonged tariffs on imports coming from Mexico and Canada, where Ford and rival GM (GM) make vehicles, would have a “devastating impact” on the industry, with the potential for billions in profits to be wiped out.
But he singled out other automakers who import cars from outside America and pay no tariffs imposed whatsoever, claiming the current tariff scheme targeting select countries isn’t fair.
“What doesn’t make sense to me is why we’re having this conversation while [South Korea’s] Hyundai-Kia is importing 600,000 units into the US with no incremental tariff, and why is [Japan’s] Toyota able to import a half a million vehicles into the US with no incremental tariffs?” Farley said. “I mean, there are millions of vehicles coming into our country that are not being applied to these, so if we’re going to have a tariff policy … it better be comprehensive for our industry.”
Farley added: “We can’t just cherry-pick one place or the other because this is a bonanza for our import competitors.”
Read more: What are tariffs, and how do they affect you?
While Toyota (TM) doesn’t pay any incremental tariffs on the vehicles it imports from Japan, it does currently pay a small one of 2.5%. The low tariffs on Japanese vehicles are interesting given the import wars that occurred in the 1980s, when tariffs on Japanese cars exceeded 60% in some instances.
As for Hyundai (HYMTF) and sister company Kia, 67% of their US sales were Korean-made vehicles, with the balance coming from US assembly plants and Mexico. The two combined for 1.7 million vehicle sales in the US last year.
The US currently has a free-trade agreement with South Korea, meaning no tariffs are collected on imported light vehicles like passenger cars.
Farley’s focus on fairness with tariffs (and of course, making sure his rivals face the same difficulties) may not matter to Trump, given his priorities.
“Trump is not focused on Japan, as he’s targeting the border and his nation’s immediate neighbors,” Japan Society President Joshua Walker wrote in the The Japan Times, as noted by the Automotive News. “Therefore, Japan is in a much better position than many other countries.”
Even if a trade war comes to pass with Canada and Mexico, Farley believes Ford is better situated than other competitors because it is the most US-centric automaker (with the biggest UAW labor force) and builds its cash-cow F-Series trucks in the US.
