THIS is why we need an import tariff!
I admit after reading the headline, I believed it was Ford’s intention to build cars in China for the Chinese consumer market, which is fine. But, that is not Ford’s intention at all. Flipping a big middle finger right in the face of President Trump, Ford’s new CEO has announced that the automaker is building its Focus manufacturing facility in China after abandoning its plan to build a plant in Mexico in response to President Trump’s proposed import tariff on products produced by American manufacturers overseas with the intent to sell those products in the United States, which is exactly Ford’s stated intent, to build cars with cheap Chinese labor, boosting Chinese employment, taxes and GDP at the expense of American jobs, taxes, and GDP.
Do the executives at Ford believe that President Trump does not possess the will to impose the tariff or do they believe that Congress and the courts will run interference to block the tariff?
Whichever the case, I hope President Trump makes it clear that there will be a tariff imposed sufficient to make Ford’s decision to move to China a losing proposition.
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Updated in 2014, I originally wrote this article when Powdered Wig was just a month old, in August, 2013, regarding the common sense of import tariffs.
From Daily Mail
- Ford Focus is currently built in Wayne, Michigan, but production is to be phased out in 2018 – and Ford had planned to move it to Mexico
- Donald Trump had pressured Ford in January over its plan to build a new Ford Focus production facility in San Luis Potosi, Mexico, which it agreed on
- Now it says it will actually build the next generation of the small car in China and import them to the United States
- No U.S. jobs will be affected, Ford said, adding that it employs more U.S. hourly workers and builds more vehicles in the U.S. than any other automaker
Ford will export the next-generation Focus compact car from China to North America in 2019, rather than from Mexico as earlier planned, saving the company $500 million, a top executive said on Tuesday.
It is the first major manufacturing investment decision made by new Chief Executive Officer Jim Hackett, who succeeded Mark Fields in late May.
Discussion about the small-car production shift from Mexico to China began ‘a couple months ago’ under Fields, said Joe Hinrichs, president of global operations.
In January, after U.S. President Donald Trump criticized Ford for shipping small-car manufacturing to Mexico, Ford said it would kill plans to build a $1.8-billion Focus plant in San Luis Potosi and instead produce the new Focus at an existing plant in Hermosillo.
Declining demand: Ford says that the market for compact cars in the U.S. such as its Focus is dwindling and that its best financial interests are served by making the Focus in China
Although it is cheaper to build and ship cars to the United States from Mexico than China, ‘this was not a variable cost decision,’ Hinrichs said in a Tuesday morning briefing.
‘It allows us to free up a lot of capital’ because Ford now has to retool only one plant – the existing Focus factory in Chongqing – rather than two to supply North America.
Given dwindling overall U.S. demand for small cars such as the Focus, ‘we thought this was the best balance of that cost/capital tradeoff,’ Hinrichs said.
He said Ford planned to inform the White House Tuesday.
Asked if Ford was concerned about having to pay a border tax, as Trump has threatened on vehicle imports from Mexico, Hinrichs said ‘the capital saving outweighs the risk’ of a potential tax on the Chinese-built Focus.