Ford tells Trump why it won't make China-built vehicle in US

Irving Hamilton
September 13, 2018

WASHINGTON-Despite the uncertainty surrounding the trade war with China, U.S. equity markets had a relatively strong opening on September 10.

Sedans and other small cars are falling out of favor with Americans.

According to CNBC, BofA noted that a 25 percent tariff "could be materially demand destructive" and estimates that about a third of the $26 billion it earns from those products comes from the United States.

Ford promptly shot down such a prospect, responding that "it would not be profitable" for the company to build the auto in the USA because of the relatively low sales volume it has forecast.

The automaker emphasized that it already has a substantial manufacturing presence in the U.S. "And of course, the world needs both USA and China to prosper, for the world to do well".

Kristin Dziczek of the Center for Automotive Research said that Ford can make Focuses "in many other plants around the world, so if they made a decision to continue to sell a Focus variant in the US market, there are several options other than building it in the United States". That might add to Washington's frustration and prompt more import controls.

The "easy solution" of moving production to the United States is anything but.

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.

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In commodities, oil prices were firmer after three straight days of losses, with USA crude futures up 44 cents at $68.19 per barrel. The US's ability to continue to dominate telecommunications technology, including the upcoming fifth-generation phone networks, will be hampered by the levy on imports from China.

"If the USA side obstinately clings to its course and takes any new tariff measures against China, then the Chinese side will inevitably take countermeasures to resolutely protect our legitimate rights", Foreign Ministry spokesman Geng Shuang told a regular briefing, when asked about Trump's warning.

Apple, like other tech giants, has benefited from the last year's overhaul to the USA tax code, and the company has committed to returning much of the $252 billion in cash it held overseas.

Other tech companies have expressed concern, too.

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.

Apple assembles most of its products, including the iPhone, in China. Seoul and Beijing later mended relations, but Lotte gave up and sold its China operations.

Long Guoqiang, vice-president of the Development Research Center of the State Council, said China has ensured fair treatment for its goods, personnel and capital overseas.

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