Home News Ford Scraps plan to import China-built small car due to tariffs

Ford Scraps plan to import China-built small car due to tariffs

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The Trump administration has dropped its plans to import the compact Focus vehicle from China to the US next year.

Ford had planned to start with a new version of Focus from China in the second half of 2019. But the current 25% tariff boosted the economic case of importing the vehicle, said Kumar Galhotra, head of Ford North America.

The tariff made it a "very difficult business case for us, so we decide to use those resources elsewhere," Mr. Galhotra told reporters during a telephone conference on Friday.

Ford has recently discontinued Focus's US production, but said it would re-launch next year as a small crossover commercial vehicle made in China. The decision to mend the import plan means that Focus's name tag will no longer be sold in the US, a spokesman said.

The motion signals that the Trump government's trade policy has begun to influence key production decisions in the auto industry. So far, many car managers have taken a wait-and-see attitude in the hope that the government would change course or make new trade agreements.

Ford has said that the new version of the Focus was seen as a relatively light seller in the US – projected at less than 50,000 vehicles a year – and these volumes did not guarantee US production. The company said it would be cheaper to use surplus factory space in China than to continue to build the focus at a factory in Detroit where it has been manufactured for years.

In 2016, Ford said it would shift Focus production to an existing factory in Mexico, but switched to the China import plan last year, saying that it would cost about $ 500 million cheaper than efforts south of the border.

The 25% tariff, which came into effect in July, has been problematic for some automotive suppliers, but has so far had little impact on automakers. Few Ship Vehicles From China For Sale In The US General Motors Co. became the only car company to do so in significant numbers in 2016, when it began importing a Buick Envision SUV built in China.

GM has asked the Trump administration for an exemption from Envision's tariffs, suggesting that it could withdraw the vehicle from the US market if the request is not granted. Mr. Galhorta said that Ford did not seek clearance for the focus.

Mr. Galhotra said the decision will have "marginal" effects on the future sales of the automaker in the US, where Ford plans to increase the number of license plates offered on 23 nameplates within five years – despite plans to eliminate several cars lines , Ford has said it would add more trucks, SUVs, and electric and hybrid models to respond to consumer demands.

Write on Mike Colias at Mike.Colias@wsj.com

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