By Mike Colias and Ryan Felton

Ford Motor has few rivals as an icon of American industry. The Dearborn, Mich., automaker is credited with helping to create the country's middle class through the $5 workday instituted by founder Henry Ford in 1914. Its legendary assembly line mass-produced cars that spurred the nation's transportation system and reshaped society.

In the advertising age, Ford has celebrated its image as America's builder, with country music-infused TV commercials showing construction workers piling tools into their brawny F-150 pickup trucks. Ford's own factory workers have often appeared in ads too.

At first glance, no other auto company looks better positioned than Ford to power through the gauntlet of tariffs just announced by President Trump. Of all the cars, pickup trucks and SUVs that Ford sells in America, 80% are made domestically -- one of the highest percentages of any major automaker. Its F-150 pickup truck -- America's No. 1 selling vehicle and the company's profit engine -- is built in the U.S. Many of its parts are produced domestically too: frames from Kentucky, exhaust manifolds from Michigan, engines from Ohio.

But a look under the F-150's hood reveals a key vulnerability for the company in Trump's new tariff regime: There are thousands of parts that cross the border from Mexico and elsewhere. More than half the value of the truck's components comes from outside the U.S. -- at least two dozen countries, including alternators and wheels from Mexico and tires from South Korea.

Starting next month, each one of those parts could face a fresh 25% tax. So even though Ford's trucks are built in the American heartland, import tariffs could jack up the average price by thousands of dollars. Tariffs on parts could cost Ford 6% of its revenue, according to an analysis from financial firm Bernstein.

As for archrival General Motors, executives there are grappling with even bigger problems. Since the North American Free Trade Agreement (Nafta) took effect in the 1990s, GM has sent a significant amount of its factory work across borders, especially to Mexico. Cheaper labor costs there have allowed GM to build not only smaller, less expensive cars but also big, pricey pickup trucks.

Today, GM imports more than twice as many cars as Ford, including roughly half of its U.S.-sold pickups, the Chevrolet Silverado and GMC Sierra. It also brings in small, sporty SUVs from South Korea. Duties on parts would cause GM's costs to soar, but the tariffs on assembled cars would also hit the company hard, leaving it exposed to a big profit squeeze.

During Detroit's heyday, in the decades after World War II, GM and Ford employed more than 850,000 people in the U.S. Today, the companies combined have about 180,000 U.S. employees. President Trump's stated aim is to reclaim the lost glory of American industry, bringing back the factories and manufacturing jobs that have fled elsewhere. "We're going to produce the cars and ships, chips, airplanes, minerals and medicines that we need right here in America," Trump said.

But after three decades of setting up supply chains and factory networks under free-trade rules, automakers now find themselves peering into a funhouse mirror of tariff scenarios: a 25% duty on vehicle imports, higher steel and aluminum costs, a 20% tariff on anything from China and a potentially catastrophic levy on auto components that is still being hashed out.

Observers inside and outside the industry believe that the tariffs could deal a heavy blow to the two storied giants of American car manufacturing. One U.S. auto-industry executive described three potential outcomes: "OK, bad and Chernobyl."

Profit forecasts suggest that such worries are valid. Wall Street analysts predict that the new tariffs could cost GM, Ford and Jeep-maker Stellantis several billion dollars annually, with GM bearing the biggest burden. Even though Stellantis imports more cars than Ford, the hit to its profits will likely be less severe because Ford relies more on imported parts, Bernstein auto analyst Daniel Roeska said in a recent research note. "Ford and GM may talk up U.S. roots," he wrote, "but their supply chains run through Mexico and China."

Both companies have said they are working to mitigate the impact of the tariffs on their businesses and have been in close talks with the administration. Ford and GM's concerns go beyond the threat to their own bottom lines. Tariff costs could cripple some of their suppliers, and factories could be knocked offline if parts makers go insolvent or stop shipping. During past industry shocks, like the 2008 financial crisis and the Covid-19 pandemic, some suppliers refused to ship unless their car-company customers helped them financially.

"Margins in the supplier business are not great to start with," said Mark Barrott, head of the automotive and mobility practice at consulting firm Plante Moran. "If they're shipping dollars out the door with every component, at what point do they make a decision that stopping shipping is the right one?"

The tariffs on car parts alone would cost the U.S. industry around $26 billion, which translates to more than $3,000 per vehicle, Bank of America analyst John Murphy said. "The supply base is where there is the greatest risk of disruption to North American production," he said in a research note on Wednesday.

A World-Wide Supply Chain

The auto-parts sector serving U.S. carmakers is massive and includes everything from global companies like Canada's Magna and Germany's Bosch to small mom-and-pop auto suppliers concentrated in states such as Michigan, Ohio and Indiana. The sector employs over 930,000 people and contributes 2.5% of the U.S. gross domestic product, according to MEMA, the vehicle suppliers industry group.

"Most of the supply base looks like us," said Gary Grigowski, vice president of an 80-worker supplier of plastic components like switches, based in Michigan. "It's a lot of smallish manufacturers in little towns like we are," he said.

In the 1930s, Ford's massive River Rouge plant near its Dearborn headquarters was the world's largest factory complex. More than 100,000 people worked there at its peak -- 25 times the number of a typical factory today. Ford made nearly everything on site. Raw steel would stream into one end of the sprawling complex on the banks of the murky Rouge River, and shiny, black Model Ts would roll out the other end.

Even then, though, the company leaned on imports of raw materials from all over the world. The company famously owned rubber plantations in Brazil so it could crank out millions of tires.

The U.S. car industry continued to operate with mostly low trade barriers through much of the 20th century. In the 1990s, Nafta was viewed as a significant victory for carmakers, allowing them to take advantage of cheaper labor and make lower-priced vehicles. The industry's supply chain followed, giving the companies the flexibility to spread their factories across the U.S., Mexico and Canada.

GM's manufacturing roots in Mexico go back to the 1930s, when it began making Chevrolet trucks in Mexico City. Today it churns out pickup trucks in the central Mexican town of Silao, in a factory that opened shortly after Nafta was enacted.

Ford staked out territory in the country even earlier, opening its first factory in 1925 to assemble Model Ts. Over time the company used its factories in Mexico to focus on small car production. Today it imports three fully-assembled models to the U.S., including the Maverick small pickup and Mustang Mach-E electric.

American-Made Abroad

Even while expanding overseas, Ford has touted its American-made bona fides. It returned to that playbook on Thursday, rolling out a new ad campaign, "From America, For America," including a commercial with scenes of workers in brightly lit factories welding together gleaming pickups. The ad boasts that Ford makes more cars in the U.S. and employs more auto workers than any other manufacturer.

"Now, at this unprecedented moment in automotive history," the voiceover says, referring to the tariff blitz, "who benefits from Ford's commitment to America for over 120 years? You."

Ford's heavy reliance on the U.S. for carmaking has left it at a $1 billion-a-year profit disadvantage relative to GM and Stellantis. Bill Ford, the company's executive chairman and great-grandson of Henry Ford, has said he wants to help bolster American manufacturing despite the competitive hit. "It has added costs to our business," he said during a 2023 speech. "But it aligns with my personal values, the values of our company and our history."

Over the years, though, Ford has shifted much of its parts base to lower-cost countries. For example, some of the massive engines that go into Ford's Super Duty pickups -- its largest trucks, built in Kentucky and Ohio -- are shipped in from Mexico.

"You can have most of your final assembly in the U.S., but you have to balance that by having engines or other high-value parts in places like Mexico," said Mark Fields, who served as Ford's CEO in the mid-2010s. "Otherwise, you're at a competitive disadvantage."

Ford and other carmakers have become reliant on Mexico and other lower-cost countries for more than just big-ticket items like engines and transmissions. Automakers commonly get many cheaper components -- brake pads, seat upholstery, fasteners -- from overseas. Such commodity items are difficult to make in the U.S. at a profit, executives say.

One example is wiring harnesses, the sheaths of wire and cables that distribute electricity through a car. They are painstaking to make and require a great deal of manual labor, which is why production of them has moved to Mexico, Central America and other lower-wage countries.

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April 04, 2025 21:00 ET (01:00 GMT)

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