Tariffs, Supplier Fire Continue to Batter Ford

Why It Matters

The twin tariff and supply‑chain shocks erode Ford’s profitability and highlight the vulnerability of U.S. automakers to policy shifts and supplier disruptions, prompting tighter risk management across the industry.

Key Takeaways

• Ford incurred ~$2 B tariff hit in 2025, double forecast
• Supplier fire at Novelis added $2 B supply‑chain cost
• Misaligned tariff offset date increased Ford’s expenses
• Ford expects $1 B tariff impact in 2026
• Contingency plans mitigate aluminum shortage until Q2 2026

Pulse Analysis

The United States’ tariff regime, re‑energized under the Trump administration, has become a strategic cost factor for domestic automakers. While intended to protect American manufacturing, the retroactive application of tariff credits and the timing of offset eligibility have introduced budgeting volatility. Ford’s experience mirrors that of peers such as Toyota, Volvo and Subaru, all of which cite tariff exposure as a material earnings drag. Understanding the policy mechanics—especially the distinction between tariff liabilities and offset credits—is essential for investors assessing auto‑sector risk.

Ford’s 2025 earnings call revealed that a simple date‑change misinterpretation inflated its tariff expense by about $2 billion. The company had expected the auto‑part credit to take effect on May 3, but it actually became active on Nov. 1, leaving a six‑month window of unmitigated duties. This accounting surprise forced Ford to adjust its cost forecasts and underscored the importance of precise regulatory tracking. CFO Sherry House now projects a $1 billion tariff burden for 2026, signaling that even with corrected offsets, the fiscal impact remains significant.

Compounding the tariff issue, a fire at Novelis’ Oswego facility crippled a key hot‑mill used for aluminum sheet—an essential input for Ford’s lightweight vehicle platforms. The outage, projected to last until the second quarter of 2026, has already added roughly $2 billion in supply‑chain costs, including premium freight and temporary sourcing. Ford’s contingency strategy, which leverages alternative suppliers and inventory buffers, aims to stabilize aluminum flow but cannot fully offset the higher material premiums. The incident illustrates how single‑point supplier failures can cascade into sizable financial headwinds, prompting automakers to diversify their material bases and invest in resilient manufacturing networks.

Tariffs, supplier fire continue to batter Ford

By Phil Neuffer · Published Feb. 13, 2026

Ford F‑150 trucks are assembled at a factory on Jan. 13, 2026, in Dearborn, Michigan. The automaker expects to take a $1 billion tariff hit in 2026, according to a recent earnings call. Anna Moneymaker via Getty Images

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Dive Brief

• Unexpected tariff costs and expenses related to a fire at a major supplier rocked Ford Motor Co.’s financial performance in 2025, according to the company’s Feb. 10 earnings call.

• The automaker ended up taking a roughly $2 billion hit from tariffs during the year, roughly doubling its projections from as recently as October, per President and CEO James Farley. The huge spike came from “an unexpected and late year change in tariff credits for auto parts,” Farley said.

• Ford also incurred a $2 billion headwind from supply disruptions caused by multiple fires at a facility owned by Novelis, which supplies aluminum to the automaker. Damage from one of the fires at the Oswego, New York, site has kept a key piece of equipment sidelined for months.

Dive Insight

Ford is one of several major automakers that have felt the sting of the Trump administration’s tariffs on financial performance. For example, Toyota said this month that new U.S. tariffs were the primary culprit behind a negative impact of roughly $8 billion over the first nine months of fiscal 2026. Volvo and Subaru have also recently pointed to tariffs as a burden on their results.

The blow to Ford’s fortunes was exacerbated in Q4 due to confusion over the effective date for auto‑part tariff offsets for domestic manufacturers from the Trump administration.

“The short explanation is a credit that we have against our tariff liabilities on parts became effective on Nov. 1,” Chief Policy Officer and General Counsel Steven Croley said on the call. “And we had understood it would become effective instead on May 3.”

Even with the offsets now in place, Ford still expects to face a $1 billion impact from tariffs in 2026, according to CFO Sherry House.

Ford’s tariff struggles were compounded by aluminum supply issues from the Oswego plant fire. Novelis confirmed this week that it expects its damaged hot mill, a key piece of equipment for aluminum production, will resume production by the end of Q2 2026. The rest of the facility has operated without disruption since November, including cold‑mill and heat‑treatment production, as well as automotive finishing and shipping.

As it awaits the return to full capacity at the Novelis plant, Ford said it has contingency plans to ensure aluminum supply. However, the disruption will continue to increase costs for the automaker.

“There will be tariffs and premium freight associated with that supply continuity of aluminum until we can get the Novelis hot mill back up and running sometime between May and September,” House said prior to Novelis sharing its expected restart date.