Published: Tue, September 11, 2018
Markets | By Jeffery Armstrong

Despite Trump tweet, Ford says it won't make hatchback in US

Despite Trump tweet, Ford says it won't make hatchback in US

"It would not be profitable to build the Focus Active in the US given an expected annual sales volume of fewer than 50,000 units", Ford said Sunday.

Since then, though, Trump has threatened an additional $267 billion of tariffs on China, a move revealed Friday that could cover virtually all Chinese-made goods entering the United States.

As you can see in Trump's tweet above, his solution to that is for Apple to finally move production to the United States, something Trump has been campaigning for since before he was elected.

Ford Motor Company is not planning to build its Focus Active vehicles in the U.S.

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Ford responded the same day in a statement to The Detroit News that it won't build the Focus Active in the U.S.as the expected yearly sales of less than 50,000 would make the project unprofitable.

Last year, Beijing destroyed South Korean retailer Lotte's business in China after the company sold a golf course in South Korea to its government for construction of a missile defence system opposed by Chinese leaders. 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.

Ford has traditionally produced a range of sedans, including the Focus, Taurus and Fiesta. Mr. Trump insinuated in a weekend Twitter post that Ford would build the small auto in USA instead of importing it from China. After the earlier tariffs targeting US$50 billion of U.S. goods, that leaves barely US$100 billion for retaliation, or half of Trump's US$200 billion list of goods for the second round of tariffs.

The plan, said industry analyst Ed Kim of AutoPacific, was to pare down the Focus lineup to Active wagons and import them from China.

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

"The margins are very slim, " Dziczek said.

The tariffs changed everything.

The Trump administration began imposing higher taxes on goods imported from China this summer. Last month, it added tariffs to another $16 billion in Chinese goods and is readying taxes on another $200 billion worth.

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The technology sector is one of the biggest potential losers in the $200 billion tariff list proposed by Washington on Chinese imports because the tariffs would make imported computer parts more expensive.

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