Ford‘s CEO Jim Farley used the company’s second-quarter earnings call on Tuesday to take direct aim at rivals manufacturing in Japan and South Korea, arguing they benefit from deep local supply chains, historically weak currencies and a tariff rate he characterized as “modest.”
Responding to Goldman Sachs analyst Mark Delaney on the tariff and trade environment, Farley framed the ongoing renegotiation of the United States-Mexico-Canada Agreement (USMCA) not as a defensive exercise but as a chance to reshape the competitive landscape in Ford‘s favor.
“We want to make it easier for Ford and other US makers to compete with Japan and South Korea,” Farley stated.
The Japanese and Korean manufacturers, he said, have “incredibly strong local supply chains like steel and aluminum,” alongside “much weaker currencies, in some cases 40-year lows, and they have a modest 15% tariff.”
He then added a pointed reference to domestic rivals, saying that “even some of our domestic competitors import from those locations, and they have huge advantages.”
Roughly 90% of the Chevrolet and Buick subcompact sport-utility vehicles that General Motors builds in South Korea are exported to the United States, the Wall Street Journal reported in April.
Currency at Multidecade Lows
Farley’s reference to 40-year currency lows aligns with conditions in the foreign exchange market at the time of the call.
The Japanese yen fell beyond 162 per US dollar on June 30, reaching its weakest level since December 1986, according to data reported by UPI.
The decline has been driven by the wide interest-rate gap between the US Federal Reserve and the Bank of Japan, which has kept its policy rate at 1.0% while the Fed has maintained a range of 3.50% to 3.75%.
A weaker yen lowers the dollar-denominated cost of Japanese-built vehicles and parts shipped to the United States, effectively granting Toyota, Honda, Nissan and Subaru a pricing advantage on any production that remains in Japan.
The South Korean won has moved differently.
After falling to about 1,540 per dollar in late June, decoupling from its historical correlation with the Japanese yen, the Korean won has since strengthened toward the 1,470 range.
That recovery narrows, without closing, the gap Farley described: the currency remains well below pre-2022 levels, and Hyundai Motor Group retains a cost base denominated in a weaker currency than the dollars Ford pays for US labor and materials.
The 15% Tariff
Farley’s reference to a 15% tariff corresponds to rates the Trump administration negotiated with both Japan and South Korea in 2025, reducing the Section 232 duty on imported vehicles from 25% to 15%.
The regime has shifted twice since, and once more in the days before the call.
The Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act on February 20, and the administration replaced them four days later with a flat 10% surcharge under Section 122 of the Trade Act of 1974.
The authority carries a statutory 150-day limit, and it expired at 12:01 a.m. ET on July 24.
USTR imposed replacement duties under Section 301 the previous day, taking effect the moment the surcharge lapsed — 10% or 12.5% depending on country of origin, across roughly 80 economies. Japan and South Korea both sit on the 12.5% tier.
Goods entered for consumption by July 28 remained under the old Section 122 rules. Shipments arriving from yesterday face the Section 301 rates.
Unlike Section 122, the Section 301 duties carry no statutory expiration and can be removed only by the administration, by negotiation or by the courts. A challenge was filed the week they took effect.
Trade trackers differ on the precise duty now facing a Japanese or Korean passenger vehicle, because Section 232 goods are excluded from the general surcharge to the extent the sectoral duty applies, and the 2025 framework rate for the two countries is disputed. Farley’s 15% figure reflects that negotiated framework rather than any single line in the tariff schedule.
Either way, the Ford CEO’s point was that the tariff wall facing Japanese and South Korean imports remains insufficient to neutralize the currency and supply-chain advantages those automakers enjoy.
USMCA as Competitive Lever
Farley positioned the USMCA renegotiation as the primary mechanism to address what he sees as an uneven playing field.
Ford assembles about 77% of its vehicles in the United States, employs the most United Auto Workers members among Detroit automakers and exports the most vehicles from US plants — figures the CEO has cited repeatedly in public appearances this year.
“Ford is an unusual company in a way. We build the most in the US. We have the best ratio between imports and our local production. We also export the most,” Farley said on Tuesday’s call. “And even for us, an improved USMCA could be a great opportunity for the industry and for Ford.”
He described engagement with the US Trade Representative’s office as well as the governments of Mexico and Canada.
“I think because […] we’re Ford, we have great access to everyone, and I think at the top of the house, we all have the same kind of principle, which is build a stronger US industrial base,” the CEO stated.
The Detroit automaker is “prepared to support revising the USMCA, so long as it allows the promotion of a more competitive US auto sector, and that’s really our lens for this negotiation,” Farley said.
“We want to put Ford and companies like Ford that are committed to US manufacturing in a better level playing field with these foreign competitors,” he added.
The USMCA review formally opened on July 1. As it stands, the agreement remains in effect until 2036 and expires then if the parties fail to agree on an extension.
Farley acknowledged the negotiations are at an early stage.
“We’re in the early days of engaging, at this point, I think it’s very early days, but that’s going to be our orientation,” he noted.
Trade Landscape
Farley’s critique comes against a backdrop of intensifying trade activity across the auto sector.
President Trump has pointed to Toyota‘s decision to shift some production from Mexico to Texas as evidence that tariffs are reshaping manufacturing footprints.
During a visit to a GM plant on Monday, Trump defended the tariff regime and his policy changes throughout the past year as a tool to protect manufacturing jobs.
Canada is the sharper flashpoint.
Trump signed three proclamations in mid-July imposing an additional 50% tariff on a range of Canadian goods under Section 338 of the 1930 Trade Act, and Canada’s 25% counter-tariffs on US vehicle imports remain in force.
The United States declined to renew the USMCA for a further 16-year term at the July 1 joint review.
Ford is also navigating trade dynamics in Europe, where it recently signed over a hall at its Almussafes plant in Spain to Geely, and where it has been pitching the Ranger Super Duty to defence procurement as commercial demand softens.
Separately, Farley was brief on Ford‘s broader tariff mitigation efforts, saying the company had “done a good job with our exposure to tariffs” and had worked with the administration as well as its own cash-collection strategy to manage the cost.
Ford absorbed roughly $2 billion in tariff costs in 2025, as EV previously reported.
