Ford Motor Co. chief executive Jim Farley will travel to Washington on Wednesday to warn members of Congress that the 25 per cent tariffs President Donald Trump has proposed on Canada and Mexico would “blow a hole” in the United States auto industry.

The impact of the tariffs, which Trump delayed for a month last week, would be “devastating” for American automakers, Farley said on Tuesday. They would also provide a “windfall” to Asian and European rivals that wouldn’t face similar levies on cars they import from their home regions, he said.

“President Trump has talked a lot about making our U.S. auto industry stronger, bringing more production here,” Farley said at a Wolfe Research automotive conference in New York. “So far, what we’re seeing is a lot of cost, a lot of chaos.”

Farley has been among the U.S. auto industry’s most outspoken leaders about the ramifications of steep new levies that could add US$60 billion in costs to the sector, according to consultant AlixPartners. Much of those costs are likely to be passed on to consumers, which could see new-vehicle prices rise by about US$3,000, Wolfe analysts have estimated.

“Let’s be real honest, long term, a 25 per cent tariff across the Mexico and Canadian border will blow a hole in the U.S. industry that we have never seen,” Farley said.

Farley will detail the tariff threat when he meets with members of Congress this week, which he said was his second trip to Washington in three weeks. He’ll also warn against dismantling former President Joe Biden’s signature environmental legislation, the Inflation Reduction Act, which gave federal subsidies to build electric vehicle and battery plants in the US. Ford is investing billions to build EV and battery factories in Tennessee, Ohio, Michigan and Kentucky.

“We’ve already sunk capital,” Farley said. “Many of those jobs will be at risk if the IRA is repealed, big parts of it repealed.”

Bloomberg.com