Wolfe Research analyst Emmanuel Rosner upgraded Ford‘s stock rating from Underperform to Peerperform on Wednesday, a day after Trump commented on a potential tariff relief, speaking at the White House.
In a new research note, Rosner stated that “Ford shares have outperformed the broader market YTD [year to date], as well as their D3 peers [Detroit-based General Motors and Stellantis].”
According to the analyst, Ford is “relatively insulated from tariff risk given their U.S.-centric manufacturing base.”
The brand’s domestic production stands at 77%, importing only 23%, while GM sources 49% of its U.S.-sold vehicles from Mexico, Canada and other regions.
Jim Farley, Ford’s CEO, told CNN earlier this Wednesday that the company has “worked with his [Trump’s] team like every day for the last couple months and at a very high level of engagement.”
“The administration knows Ford’s a bit different,” Farley stated, before adding that “Bill Ford’s [the company’s president] talked to the [U.S.] President a couple of times” and that a solution is “going to take a little time.”
“We’re all trying to figure this out to do the right thing for the country and it’s going to take a little time. But we never left the U.S. I guess that’s my point. We just never left,” he added.
Farley said the company has been speaking with the other Detroit automakers to find a common solution. “We’ve also been working with Mary [Barra, GM’s CEO] and Stellantis too as a group, because we recognize how important this moment is to get this all right and kind of figure it out together.”
Back to the new research note, Rosner noted that “the rationale for our previously cautious stance on the stock remains largely intact,” before specifying that “cyclical risks not fully reflected in estimates and potential pressure on shareholder returns from cash burn.”
However, the analyst considers that “recent tariff developments could offer Ford a meaninful competitive advantage.”
Tariff Relief
Earlier in April, the U.S. Administration had imposed a 25% tariff on all imported auto parts, leading auto stocks in the U.S. to waver. Due to rising tariffs between the U.S. and China on all imported goods, Ford halted exports of its high-end vehicles from the U.S. to China, according to a Wall Street Journal report.
On Tuesday, and amid negotiations during a 90-day pause announced in mid-April, President Donald Trump signed executive orders aimed at mitigating the impact of his auto tariffs.
The orders offer a combination of tax credits and relief from other material-related duties. The President is granting a two-year window on automakers for them to increase the share of domestically produced components for U.S.-made vehicles.
“We just wanted to help them,” Trump stated. “If they can’t get parts, we didn’t [don’t] want to penalize them.”
Earlier that day, U.S. Commerce Secretary Howard Lutnick had stated that “parts offset is available only to the finished producer making and selling the car,” commenting that “this is ‘finish your cars in America’ and you win.”
Lutnick added that “auto manufacturers will pick the highest tariff that comes with their goods and they will only pay one (…), whichever is higher” and that “USMCA parts will not carry tariffs, no change in that approach.”
Speaking with CNBC, the Commerce Secretary also announced that negotiations are advancing and there is a “deal done,” with the U.S. waiting for the unidentified country’s “prime minister and their parliament to give approval.”
Deutsche Bank analyst Edison Yu warned earlier this month that Ford and GM’s production in other American countries depends on the longevity of the USMCA free trade agreement signed in 2020.
As of the time of writing, Ford is trading nearly 2% lower at $9.95 on early Wednesday. The stock has lost about 17% in the past twelve months.
