On Sunday, President Donald Trump tweeted approvingly about the 10-day-old news that his 25% tariffs on Chinese-made automobiles had led Ford (F) to decide against importing its compact Ford Focus Active model to the U.S. From the Chinese factories where the car is made.
“This is just the beginning. This car can now be BUILT IN THE U.S.A. And Ford will pay no tariffs!” Trump exulted.
“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!
— Donald J. Trump (@realDonaldTrump) September 9, 2018
One problem: That’s not going to happen.
Ford’s North America product communications manager, Mike Levine, spelled it out for the president in a tweet noting “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.”
Https://twitter.com/mrlevine/status/1038864475120697345
Ford didn’t move production of the Focus to China by accident; it did so because the U.S. Market has shifted away from smaller vehicles toward SUVs, which has made production of the Focus in the U.S.—a relatively expensive location—an illogical choice.
The automaker decided a couple years back to shift production of the Focus to Mexico, then last year it opted for China instead. Earlier this year Ford cancelled all its smaller cars with the exception of the Mustang and the Focus Active.
Https://twitter.com/mrlevine/status/989257203432542210
Then, after Trump started threatening his new tariffs against China, Ford decided in August that it wouldn’t sell the Focus Active in the U.S. After all. The profit margins were simply too small to be worth it.
The auto-sector market economist Jon Gabrielsen told the Detroit Free Press that Trump’s tweet was “further evidence that neither the president nor his trade representatives have any clue of the complexities of global supply chains.”
“This forces Ford to forfeit the sales they would have had if they could continue to import that low-volume niche vehicle,” Gabrielsen said.