Is Ford’s Dividend Safe? Trump’s Tariff Reprieve Buys Time—But Not Certainty
President Donald Trump’s recent executive order easing certain auto-related tariffs offers temporary relief to automakers, but investors watching Ford Motor Company (NYSE: F) closely aren’t in the clear yet. While the move may lower costs across the industry, it doesn’t fully neutralize the looming threat tariffs pose to automaker profitability—especially for dividend-rich companies like Ford.
Trump’s Tariff Adjustment: What Changed?
On April 29, 2025, President Trump signed an executive order adjusting how tariffs on autos and parts are applied. The move clarified that tariffs on imported vehicles would not stack with existing steel, aluminum, or “reciprocal” tariffs already in place. Additionally, the order introduced tariff offsets for imported car components, potentially saving domestic carmakers an estimated $2,000 per vehicle.
That’s a meaningful reduction. Prior to the announcement, assembling a single vehicle in the U.S. could have cost automakers between $5,000 to $10,000 more due to tariff-related price hikes on parts. With this policy change, those estimates drop by as much as 50%—a win for the industry, but only a partial one.
“We’re putting America first, but we’re also protecting American workers and automakers from getting crushed by unfair costs,” Trump said during the signing ceremony.
Ford’s Dividend in the Crosshairs
Ford declared its regular $0.15 per share dividend for Q2 2025, maintaining its annual yield of 6.1%. But even with lower exposure to tariffs compared to rivals like General Motors (NYSE: GM) and Stellantis (NYSE: STLA), analysts are questioning whether that dividend is sustainable.
According to BNP Paribas Exane analyst James Picariello, Ford’s operating profits could still face a serious hit—$2.7 billion in 2025, $2.3 billion in 2026, and $2 billion in 2027—even with Trump’s adjustments. That’s more than half of Ford’s projected free cash flow, which is expected to average around $3.2 billion annually through 2027.
“The numbers don’t lie,” Picariello warned in a client note. “Ford may have fewer direct tariff exposures than GM, but its cash flow cushion isn’t deep enough to shrug off these pressures.” (BNP Paribas Research)
Ford vs GM: Dividend vs Buybacks
Part of the reason investors are focused on Ford is the company’s commitment to dividends as a shareholder return strategy. GM, by contrast, prioritizes stock buybacks.
Ford’s annual dividend cost: $2.4 billion
GM’s dividend cost: Around $500 million, with a preference for buybacks
That $2.4 billion dividend obligation eats up nearly 75% of Ford’s projected free cash flow—well above the S&P 500 average payout ratio of 35%. This outsized obligation makes Ford especially vulnerable to shocks, such as escalating tariffs or supply chain disruptions.
Chris Senyek, Chief Investment Strategist at Wolfe Research, says alarm bells start to sound when dividend payout ratios approach or exceed 80%.
“That 80% threshold is where boards start to get nervous—especially when free cash flow estimates are under pressure from policy uncertainty,” Senyek explained in a recent note to investors. (Wolfe Research)
Ford’s Advantage (and Weakness)
Ford does enjoy a few structural advantages:
It imports only about 20% of the cars it sells domestically, compared to GM’s 45%, according to Bloomberg.
Tesla (NASDAQ: TSLA), which builds many of its vehicles domestically and operates without legacy pension obligations, remains the least exposed among major U.S. automakers.
But Ford’s starting point is weaker than GM’s. Ford projected $7.8 billion in 2025 operating profits, while GM projected $14.7 billion—nearly double. This leaves Ford with less buffer to absorb ongoing costs, especially if parts tariffs escalate again or if new penalties are introduced during trade retaliation cycles.
Tariff Fallout Already Hitting Competitors
GM’s recent earnings call included a bombshell: it suspended stock buybacks and pulled forward guidance due to “uncertain policy effects,” widely interpreted to mean the tariff landscape.
Deutsche Bank analyst Edison Yu and Bernstein’s Daniel Roeska—both of whom correctly predicted GM’s buyback pause—now warn Ford’s dividend could be next on the chopping block if cash flow deteriorates.
“The guidance from Ford in Q2 will be critical,” Roeska said. “If they confirm the projected $2-3 billion tariff headwind, the dividend could be the first lever they pull.”
Ford is expected to report Q1 2025 earnings on May 5, and investor eyes will be glued to management’s forward guidance on cost impacts and dividend sustainability.
Investors Are Cautiously Optimistic—for Now
Despite the concerns, Ford stock is holding steady in 2025, outperforming GM and Stellantis, which have seen double-digit losses. Ford’s resilience may reflect investor confidence in its domestic production model and the Trump administration’s willingness to adapt tariff policy.
But that confidence has limits. Institutional investors are watching cash flow trends, vehicle pricing, and supplier contract renegotiations closely. A prolonged tariff environment could still force automakers to raise prices, cut costs, or pull back on shareholder returns.
Related Stock Performance (YTD 2025):
Ford (F): ~Flat
GM (GM): -12.5%
Stellantis (STLA): -10.8%
Tesla (TSLA): +6.2%
What Could Change the Outlook?
Several factors could swing the balance:
Further Executive Orders: Trump hinted that “more refinements” to trade policy are coming, potentially offering more relief to domestic automakers.
Congressional Legislation: Some Republican lawmakers are pushing for legislation that would permanently exclude auto parts from tariff lists.
International Negotiations: Trade talks with China, Mexico, and the EU could ease reciprocal tariffs in key categories.
But if any of those levers fail to materialize, Ford may find itself forced to choose between preserving capital or maintaining its historically rich dividend.
Bottom Line for Investors
Ford’s 6.1% dividend may be sustainable—for now. But that hinges on two critical questions: how long Trump’s policy adjustments hold, and how effectively Ford can control its costs.
Investors should watch for three signals in Ford’s May 5 earnings call:
Updated guidance on tariff-related costs
Management commentary on dividend sustainability
Any hints of restructuring or cost-cutting measures
For now, Ford offers an attractive yield in a low-rate environment—but with rising geopolitical and policy risk. Conservative income investors may want to tread carefully and keep an ear to the ground for further tariff developments and cash flow updates.
