The 25 per cent tariff on Chinese vehicle imports implemented by the Trump administration has forced U.S. automaker Ford Motor to cancel its plan of importing the new Focus Active crossover model being manufactured in its Chinese plants.
“We have made a business decision to stop development of the Focus Active crossover for U.S. customers due to the negative financial impact of new tariffs on vehicles imported from China,” a Ford representative reportedly told Nikkei.
The company said that the decision would have marginal impact on sale because the company is already expecting that the sale of small car to be below 50,000 units. However, the company is now clearly facing the challenge of doing business in China after it registered a 26% year-over-year fall in overall sales in the Chinese market.
The U.S.-China trade dispute is also having an impact on other U.S. automakers compounded by the import tariffs on steel and aluminum. General Motors could also be forced to cancel importing of its Chinese-built Buick Envision model even though the company has sought a relief for the same from the Trump administration.
Kristin Dziczek, vice president of the Michigan-based Center for Automotive Research said that Ford’s Focus Active is “probably the first of many models that will be discontinued in the U.S. market from other imported sources.”
“It’s not good for the U.S. economy or for the U.S. auto industry to put tariffs on our imports,” Dziczek told the media in an interview. Dziczek also noted that there has been the impact of steel tariffs has had “a net negative overall” on jobs, GDP and sales according to the center’s study.
During his presidential campaigning, Donald Trump had pledged to bring in manufacturing jobs back into the US from foreign land and to protect American jobs and this was one of the major poll promises made by the then presidential hopeful.
But it is likely that automotive assembly plants would not be brought back into the US because of the tariffs imposed by the Trump administration so far, opined Dziczek. Primarily because of the lack of predictability of the trade policies of the Trump administration, auto manufacturers are not “going to make these kinds of big capital investments” which are necessary for building up new manufacturing units in the US especially when the companies do not know whether the tariffs would be implemented for the long-term. She also said that it is “costly” and “risky” to open a new plant and “lasts a long time once you do decide to build it”
“Nobody’s predicting this great downfall yet, but we could start to see it if the imports of parts and vehicles to the market are put under additional tariffs,” Dziczek said.
(Adapted from Asia.Nikkei.com)