US companies bemoan impact of Trump trade tariffs

Alicia Cross
September 11, 2018

China will respond if the United States takes any new steps on trade, the foreign ministry said on Monday (Sept 10), after President Donald Trump warned he was ready to slap tariffs on virtually all Chinese imports into the United States.

"It was just yesterday that President Trump tweeted, "'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.

President Donald Trump on Sunday suggested via Twitter that American automaker Ford could begin making its Focus model in the USA, and therefore circumvent his tariffs. According to the automaker, the levies President Trump is threatening to impose on China-imported vehicles would be simply too much for the company. Earlier this year, however, the company announced a major shift in focus (no pun intended): It would begin phasing out virtually all of its cars in the US, while doubling down on trucks and SUVs.

The automaker decided a couple years back to shift production of the Focus to Mexico, then last year it opted for China instead.

Trump tweets tariffs have forced Ford to build Focus in US.

Auto industry analyst Ed Kim told the Guardian that Trump's tariffs have, effectively, ruined Ford's plan for the Focus.

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However, a Ford spokesman Mike Levine indicated that there isn't a good a business case to build the low-margin, niche model in the U.S.

If Ford sold fewer than 50,000 Focus Active wagons per year, it would run a USA factory on only one shift per day, which isn't cost-effective, Dziczek said.

If sales were high enough to justify production at a United States plant, the price of a compact vehicle isn't high enough to cover the difference in wages, she said.

Official and private manufacturing surveys for China show global demand for Chinese goods is clearly on the wane, with export orders shrinking for months in a row."Risks have increased due to the negative impacts of China-U.S. trade friction". A lot of them are luxury cars and SUVs with higher profit margins that can cover higher United States wages, she said.

China's exports to the United States have been unexpectedly resilient, rising by double digits in July and August despite the U.S. tariff hikes. These tariffs have since been extended to an additional $16 billion in Chinese goods and in the near future, will be applied to another $200 billion in goods.

Other reports by Free-Prsite

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