Ford just announced that it’s abandoning plans to sell the Focus Active — which the company makes in China — in the United States because of tariffs imposed by the Trump administration. The car was supposed to be one of two models that Ford planned to sell in the US going forward as it shifts its lineup to be almost exclusively SUVs and trucks. Now, the only car Ford will sell in the US is the Mustang.
The 25 percent tariff on cars that are assembled in China has made a “very difficult business case for [Ford], so we’re choosing to deploy these resources elsewhere,” Kumar Galhotra, Ford’s president of North America, said on a conference call on Friday morning. Ford is in the middle of a years-long restructuring that it expects will cost $11 billion.
Even if the trade war with China relaxes, Ford says it won’t change course, since it only expected sales of around 50,000 per year anyway. The company still plans to import vehicles it builds in other countries, like the EcoSport SUV (which is made in India).
In 2017, Ford decided to build the new Focus in China after it abandoned plans to move the production of the car from Michigan to Mexico. The Mexico assembly plant had been publicly criticized by Trump, who was still not sworn into office at the time. But instead of acquiescing to pressure from the president-elect and keeping production in the US, Ford decided to build the Focus in China — a decision that reportedly saved the company around $1 billion. The Focus Active will still be sold in other parts of the world, Ford says.
Trump’s burgeoning trade war with China, as well as increased tension with the European Union, has put automakers in a tough position. Most leading car companies operate on a global scale, and production plants are increasingly being placed in areas where costs can be kept low. GM — one of the only other major automakers that currently imports Chinese-built cars — has also warned that it might stop importing the Buick Envision SUV if the company is not granted an exemption to the tariff.
It’s not just the wholesale import taxes on cars that are affecting automakers. The Trump administration has placed tariffs on commodities like steel and aluminum that are crucial to building cars. While automakers have been reticent to speak out against these moves, many have adjusted their outlooks and warned investors of potential negative effects. Trump’s ongoing attempt to renegotiate the North American Free Trade Agreement has also thrown a heavy amount of uncertainty into the mix.