President Donald Trump offered some business advice to Ford Motor on Sunday: because of the administration's high tariffs on vehicle imports from China, Ford can start making its Focus Active in the United States.
The company said the additional proposed tariffs will require it to hike the cost of many of its products in the US. Now, the change in plans leaves the Mustang as the lone passenger auto with a long-range future in Ford's domestic lineup as the company doubles down on trucks, SUVs and commercial vehicles. 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 USA, while doubling down on trucks and SUVs. Mr. Trump insinuated in a weekend Twitter post that Ford would build the small auto in USA instead of importing it from China.
With the cancelation of the Focus Active, a Ford spokesman confirms, the Mustang will eventually be the only Ford auto model sold in the U.S.
According to industry analyst Ed Kim from AutoPacific, there was a strong chance the Focus Active would have been sold in the United States if it wasn't for the tariffs.
In Ford's case, pulling the plug on the low-volume Focus Active won't be hugely significant to its business because it sells more than 2.5 million vehicles annually in its home market.
Demand for small cars in the USA has been waning for years with relatively low petrol prices and a shift from cars to SUVs and trucks. "Start building new plants now", Trump tweeted.
"The margins are very slim, " Dziczek said.
In China, labour costs are about $8 per hour including benefits, but it's more than $52 per hour in the U.S., according to Dziczek. On 6 July the USA began imposing a 25% tax on $34bn in Chinese imports, including motor vehicles. A lot of them are luxury cars and SUVs with higher profit margins that can cover higher United States wages, she said.
The Trump administration has imposed tariffs on $50 billion worth of Chinese goods, including some automobiles, in a move Trump has touted as necessary to punish Beijing for what he says are its unfair trade practices and intellectual property theft.
The world's two biggest economies are clashing over USA allegations that China deploys predatory tactics - including outright cybertheft - to acquire technology from U.S. companies and challenge American technological dominance.