Arthur J. Villasanta – Fourth Estate Contributor
Dearborn, MI, United States (4E) – Ford Motor Company, the second largest U.S. automaker, has announced plans to boost production of its models made in China, especially its Lincoln luxury sedans, to remain competitive in light of Trump’s trade war.
Executive vice president for global operations Joseph Hinrichs said Ford will accelerate plans to build more of its Lincoln models in Chinese plants as the increasingly bitter trade war with the United States make American cars more expensive and less attractive.
Hinrichs pointed out the spate of tariffs makes it difficult for Ford to plan for the future. He revealed that since tariffs on vehicles exported to China now reach 40 percent, there is no business case for exporting vehicles from the United States. This only leaves Ford with one option: produce more of its cars in China.
Ford’s move to make more in China is being driven by Ford’s realization it doesn’t see any easy resolution to the trade dispute between the United States and China. On Sept. 24, Trump imposed 10 percent tariffs on an additional $200 billion worth of Chinese exports, drawing rapid retaliation from Beijing on $60 billion in American products.
Hinrichs said Ford has long championed balanced and free trade. He noted that Ford continues to encourage the Trump administration and the Chinese government “that it’s in everyone’s interest to work out their differences.” But, he said trade talks between both warring countries “will go on for a while.”
Hinrichs emphasized that China “is a core business for us.” But since this trade war involved two very powerful economies “we’re going to have to plan accordingly.”
Ford has been planning to launch new vehicles in China to halt its recent slide in that market, said Hinrichs. In 2014, Ford brought the luxury Lincoln brand to China. It launched Lincoln with the mid-size MKZ sedan and MKC small SUV.
Lincoln’s sales in 2016 rose 180 percent from 2015, its first full-year in China. To add more Chinese consumers, Lincoln introduced “The Lincoln Way,” an ownership plan that provides highly personalized services to customers.
Trump’s trade war is also very costly for Ford financially. Ford CEO Jim Hackett said Trump’s tariffs on steel and aluminum “took about $1 billion in profit from us — and the irony is we source most of that in the U.S. today anyways. If it goes on longer, there will be more damage (to Ford).”
Hackett urges Trump to resolve trade disputes with all countries quickly or it will do “more damage” to Ford, which is already suffering losses from tariffs imposed by Trump.
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