Ford drops the plan to bring in SUV model from China in wake of US automobile tariffs

Ford Motor Co. is reportedly cancelling its plan to import a new crossover model from as President Donald Trump’s tariffs undermined the business case for bringing vehicles to the US market.

Kumar Galhotra, Ford President in North America said Trump’s decision of imposing 25 per cent tariff on China-built cars in July had eroded the profitability of the Focus Active that Ford planned to start shipping into the US about a year ago. The company thus decided not to invest more money in a vehicle that would have had fewer than 50,000 annual unit sales in the US.

“Our viewpoint on Focus Active was that, given the tariffs, obviously our costs would be substantially higher,” Galhotra said. “Our resources could be better deployed.”

Daimler AG, a German-based multinational automotive corporation, also found to keep its profit outlook narrow for June 2018, citing in part an expectation that Chinese customers would purchase fewer Alabama-built sport utility vehicles in wake of Beijing’s retaliatory tariffs on US auto imports. Harley Davidson, on the other hand, expressed its plan to shift production of some of its motorcycles from the US to the European Union, which put tariffs on its bikes as a reprisal for Trump’s steel and aluminium levies.

As Trump continues his trade battles on multiple fronts, automakers anxiously step into war-gaming as in where they would assemble cars or procure automobile parts from. In addition to the imported car tariffs on China, the US also threatened steep tariffs on vehicles shipped from Europe.

Amidst all this, Ford’s financial state is reportedly deteriorating as it’s over-relied on North American operations that have seen profit margins shrink due to an ageing lineup. However, the company has pledged to get back to a 10 per cent margin.

Last month, Ford’s stock dipped below US$10 for the first time since 2012. As of Friday, the shares fell as much as 2.1% to US$9.50.

Galhotra said Ford builds about 80 per cent of the cars it sells in the US in its home market and another 15 per cent it assembles in Canada and Mexico.