Ford Faces Sales Slump as Tariffs on Canada and Mexico Take Effect

Ford Motor Company saw a sharp drop in U.S. sales last month, reporting an 8.9% decline compared to February 2024. The automaker sold 158,675 vehicles, down from 174,192 the previous year. This slump comes as the U.S. implements a new 25% tariff on vehicle imports from Canada and Mexico that took effect on March 4, 2025.

Ford’s Mixed Performance Across Segments

Despite the overall decline, Ford’s electrified lineup remained a bright spot. Electric vehicle (EV) sales climbed 15%, while hybrid sales surged 27.5%. In total, Ford moved 7,326 EVs and 15,357 hybrids in February. Meanwhile, traditional internal combustion engine (ICE) vehicle sales tumbled 12.7%, with only 135,992 units sold. 

Trucks provided a rare win for Ford, with sales jumping 7.7% to 91,735 units. But the rest of the lineup struggled: 

• SUVs: Sales slid 24.4% to 64,148 units. 

• Cars: Sales plummeted 32.2%, with only 2,792 units sold. 

How Tariffs Could Shake Up the Auto Industry

The newly imposed tariffs are expected to send ripples through the automotive sector. Analysts warn that the cost of vehicle production could surge by as much as $12,000, especially for models dependent on Canadian and Mexican supply chains. These increased costs will likely be passed on to consumers, potentially cooling demand and further pressuring sales. 

Ford, like many automakers, relies heavily on a North American supply chain. Many components used in U.S.-assembled vehicles originate from Canada and Mexico. With tariffs raising costs, companies may face production slowdowns, higher expenses, and tough decisions about sourcing materials and manufacturing locations. 

Ford Models in the Crosshairs

Ford vehicles produced in Mexico—including the Maverick pickup, Bronco Sport, and Mustang Mach-E—are expected to be among the hardest hit. Higher import costs could lead to steeper price tags, making these models less competitive in an already challenging market.

Industry-Wide Fallout

Ford isn’t alone in facing this unstable market. Toyota, for example, reported a 5.8% decline in U.S. sales in February, citing economic uncertainty and consumer hesitancy amid the looming tariffs.

The entire automotive landscape is bracing for change. Automakers may need to rethink supply chains, possibly shifting production to avoid heavy import costs. But such moves come with hefty price tags and logistical challenges. Smaller suppliers, particularly those with less financial flexibility, could feel the squeeze the hardest. 

What This Means for Buyers

For consumers, the biggest impact will be higher vehicle prices. Some estimates suggest new car prices could climb by as much as $12,000, depending on the model and where it's built. If prices rise too sharply, potential buyers may hold off on purchases, further dampening demand. 

Ford’s Game Plan

Facing these hurdles, Ford is rolling out strategic adjustments to weather the storm:

• Leadership Changes: CEO Jim Farley announced key leadership shifts to help the company stay nimble in response to market fluctuations. The moves focus on advancing Ford’s technology, policy, and customer engagement strategies.

• Commitment to EVs: Despite the sales slump, Ford remains bullish on electrification. The company is doubling down on EV investments, aiming to tap into growing demand for sustainable transportation.

The Road Ahead

With vehicle prices expected to rise, now is the time for consumers to be strategic about their car purchases. If you’re in the market for a new vehicle, consider locking in a deal before price hikes take full effect. Exploring hybrid or EV options could also be a smart move, as these models may offer long-term savings on fuel and potential tax incentives.

For those planning to hold off on buying, keeping an eye on the used car market might be worthwhile, as demand for pre-owned vehicles could rise. Additionally, staying informed about potential policy changes and automaker strategies can help you make the best financial decisions in the months ahead.

As the auto industry adjusts to these tariffs, consumers will need to navigate an evolving landscape. Whether you’re buying now or waiting for potential shifts, being proactive and well-informed will help you get the best value for your next vehicle.