Caixin
Sep 01, 2018 09:31 AM
WORLD

Ford Cancels China Exports Facing Trump Tariffs

Ford Motor Co. is canceling plans to export its Focus compact crossover model from China to the U.S. next year because of the 25% tariffs the Trump administration slapped on Chinese auto imports in July.

The increased import tax would make it too expensive to ship the Focus Active from China to the U.S., Ford North America President Kumar Galhotra said Friday on a conference call with reporters. The company decided it wasn’t worth it for a vehicle that would sell fewer than 50,000 units a year, Galhotra said.

The move signals that President Donald Trump’s trade policies have started to affect major production decisions in the auto industry. Ford became the first big American carmaker hit by the tariffs, but more impact is expected to come.

With no signs of a resolution to the trade dispute, many auto executives will have to make decisions on where they will assemble cars and obtain parts.

According the U.S. Commerce Department, nearly half of the vehicles sold in the U.S. were imported from some country last year. A large proportion of those vehicles could be subject to Trump’s tariffs.

General Motors Co.’s Chinese-built Buick Envision SUV is also subject to the tariffs. The largest U.S. automaker is seeking an exemption for the model. But GM has warned that it might discontinue selling the product in American if the request isn’t approved.

Ford had originally planned to move Focus production to Mexico as the company shifts its U.S. production to pickups and SUVs. But Trump publicly criticized the plan during his 2016 presidential campaign.

Ford eventually moved Focus production to the company’s Changan joint venture in China and said the decision would save $1 billion in investment costs compared with assembling the vehicle in Mexico.

Focus Active was scheduled to go on sale in the U.S. next summer. Ford said it would continue to make the model for Chinese and European markets.

Contact reporter Yang Ge (geyang@caixin.com)

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