What Did Trump Win in Tariff Spat With Ford?

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By Paul Ausick, 24/7 Wall St.

As he's done on many occasions over nearly two years, President Trump on Sunday declared victory in a battle he had already lost. In a Sunday morning tweet, he claimed that his tariffs on imports from China now made it possible for Ford Motor Co. (NYSE: F) to build its Focus model in the United States rather than importing the cars from China.

That would be good news for U.S. manufacturing if it bore any resemblance to the facts.

Here's Trump's Sunday morning declaration of victory:


Ford's North American product communications manager Mike Levine responded with the facts:


Ford announced in April that it would stop building all passenger cars except the Mustang in the United States. In May the company stopped building Focus sedans in Michigan and announced a plan to limit its future Focus vehicle to the new Focus Active, a crossover wagon, and import the finished vehicles from China. The new model was not expected to be available to U.S. buyers until late summer 2019, according to a report in Car and Driver.

Ford estimated that it would sell fewer than 50,000 of the new model in the United States, not enough to make economic sense for building them in this country, but enough to make it worthwhile to import them. Two weeks ago, Ford announced that the Trump tariffs had shattered the economic case for importing the cars and that the vehicle would not be sold in the United States after all.

Through the first eight months of 2018, Ford has sold a told of 75,101 Focus vehicles, a drop of 9.1% year over year. In August the company sold 10,910 units, down 30% year over year.

Auto market economist Jon Gabrielson told the Detroit Free Press:

This is 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.

The Michigan plant where the Focus had been built has been converted to build Ford's new 2019 Ranger midsize pickup truck. The company sold more than 81,000 F-Series pickups in August alone, more than year-to-date sales of the Focus model and nearly double the monthly sales of all its Ford-branded passenger cars.

Ford, like Apple, has been targeted by Trump in his trade war with China. Apple has complained about the impact of tariffs on small electronic devices like its AirPods but has not indicated that it plans to bring more manufacturing back to the United States than what it promised to do ($350 billion investment) a year ago.

General Motors has petitioned the Trump administration for a waiver from the 25% tariff on its Buick Envision SUV. Every Envision the company sells is manufactured in China and imported into the United States.

U.S. carmakers export about 250,000 vehicles a year to China and import about 50,000. So much winning.

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