DEARBORN, Mich. — Auto analysts groaned in response to Twitter posts by President Donald Trump that touted his tariffs on Chinese imports and his claim that the trade war would inspire Ford Motor Co. to build its Ford Active crossover in the U.S. rather than overseas.
Wrong, Ford said.
The Dearborn, Mich.-based company issued a statement in response to the president’s post:
“It would not be profitable to build the Focus Active in the U.S. given an expected annual sales volume of fewer than 50,000 units and its competitive segment.”
Jon Gabrielsen, a market economist who advises automakers and auto suppliers, said, “This is further evidence that neither the president nor his trade representatives have any clue of the complexities of global supply chains.”
A trade war hurts Ford, Gabrielsen said. “This forces Ford to forfeit the sales they would have had if they could continue to import that low-volume niche vehicle.”
On Aug. 31, Ford canceled plans to import the Focus Active crossover from China to the United States because of costs from the escalating trade war.
The Focus Active was meant to take the place of the Ford Focus in the U.S. because Ford is phasing out the entry-level car as it shifts its production to pickups and SUVs. Focus Active was scheduled to go on sale in the late summer next year.
“Basically, this boils down to how we deploy our resources. Any program that we’re working on requires resources _ engineering resources, capital resources,” said Kumar Galhotra, president of Ford North America. “Our resources could be better deployed at this stage.”
Tariffs imposed by Trump on Chinese products and the threat of more had a direct impact on the Aug. 31 decision, Ford said. The United States already has imposed tariffs on steel and aluminum from China and, as of July, put a 25 percent tax on cars imported from China.
“Ford was pretty clear in its statement: Focus production will not shift in part or in whole back to the U.S.,” said Stephanie Brinley, a senior analyst at London-based IHS Markit.
Trump didn’t say anything about the Ford announcement at the time. On Sunday, he quoted CNBC network and wrote: “Ford has abruptly killed a plan to sell a Chinese-made small vehicle in the U.S. because of the prospect of higher U.S. Tariffs.’” CNBC. This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs.”
“Ford is one of the companies that has the highest U.S. content and the most U.S. autoworkers of any company,” said Kristin Dziczek, vice president of the Industry, Labor & Economics Group at the Center for Automotive Research in Ann Arbor.
“You know, their statement was very clear,” Dziczek said. It’s too costly to build that car here and they weren’t planning to. They don’t make business decisions based on tweets. They make decisions based on whether there’s a demand here for the vehicle and if it can be done profitably. Demand for small cars is waning, so they thought they would build some for the rest of the world and bring a few for folks here who want one.”
Building the car may still be the plan, but not in the U.S., she said, as did other analysts. At issue is finding low-wage production sites to maintain profit margins, and that doesn’t include the U.S. or Canada.