Ford Motor Co. (NYSE: F) reported an ugly quarter. It suspended its 2025 guidance because its management does not know the effects of tariffs. Adjusted EBIT will be $1.5 billion lower than expected.

Revenue for the quarter dropped from $42.8 billion to $40.7 billion. Earnings were hammered down from $33 per share to $0.12. EBIT from the electric vehicle (EV) segment was a loss of $849 million, compared to a loss of $1.33 billion in the year-ago period. Ford’s move into EVs has been a disaster.

Chief Financial Officer Sherry House commented, “Our results in the first quarter show that the Ford+ [turnaround] plan is working. We are transforming this company into a higher growth, higher margin, more capital efficient and more durable business.” Apparently, many investors did not believe her. Shares fell after the quarter was announced. After the sell-off, Ford’s shares will be down about 20% in the past year. The S&P 500 is up 10% for the same period.

Ford has among the richest dividends of any large publicly traded company in the United States. After today’s sell-off, its dividend yield will be about 7.5%. Even dividend king Altria has a lower figure at 6.8%.

If the tariffs bite for any period of time, Ford needs to prepare for an earnings disaster, as will many car companies that have large businesses in the United States. Even though Ford makes a relatively high percentage of its cars in America, and many of its parts are from the U.S. as well, tariffs will hit the bottom line as the company has already indicated.

Wall Street has turned its back on Ford’s future prospects. Goldman Sachs recently lowered its rating on the stock: “We downgrade Ford to Neutral from Buy to better reflect a more difficult cyclical dynamic including competition internationally, weaker consumer demand, and what we expect will be higher costs from tariffs.”

Of the 26 analysts who follow Ford, 17 rate it as a Hold, and four rate it as Underperform or Sell. Most of these analysts worry about EV sales and that a small percentage of its sales are overseas. In particular, this has become and will be a problem in China, the world’s largest car and EV market, as local companies eat up market share.

Ford has already warned that there is a significant risk if Chinese EVs enter the U.S. market. Today, tariffs are blocking that move. After visiting China and looking at its EVs, Jim Farley told board member John Thornton, “John, this is an existential threat.”

Ford has terrible labor union problems. Its deal with the UAW is expected to cost $8.8 billion annually between this year and 2028. At one point, during the labor negotiations, Farley said that the costs of the labor deal “were unsustainable and would put Ford at risk of bankruptcy.”

Ford will need to drop its dividend, and management should do it sooner rather than later.

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