Ford Motor Company (F) saw its stock plummet 5.01% in pre-market trading on Monday, as the escalating tariff war between the United States and China sent shockwaves through the automotive sector. The sharp decline comes in the wake of China's announcement of 34% retaliatory tariffs on US goods, compounding the already challenging situation created by President Trump's 25% tariffs on automotive imports from Mexico and Canada.
The auto industry is bracing for significant disruptions as these tariffs threaten to upend the global supply chain and dramatically increase vehicle prices. Ford, with approximately 17% of its North American production in Mexico and Canada, is particularly vulnerable to the new trade dynamics. CEO James Farley had previously warned that prolonged 25% tariffs from Canada and Mexico would have a "huge impact" on the industry, potentially wiping out billions in profits and adversely affecting U.S. jobs.
Adding to the gloomy outlook, a Detroit-area automotive advisory firm, Telemetry, forecasts that U.S. and Canada auto sales could decline by 1.8 million vehicles this year if the global trade war escalates. The firm projects that sustained tariffs could lead to a staggering 7 million fewer light-duty vehicle sales by 2035 compared to a scenario without trade conflicts. This bleak forecast, coupled with concerns over vehicle affordability - as average new car prices approach $50,000 - is likely contributing to investor anxiety and the subsequent sell-off in Ford's stock.
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