The trade war between the United States and China has claimed yet another casualty, this time from the auto manufacturing sector - Ford. Recent strings of the report indicate the US-based automaker scrapping its initial plans to import compact vehicles made from China to the US as the tit-for-tat economic spat being fought between the Asian powerhouse and its Western counterpart continues to take form.
Prior to this recent development, Ford planned to import a new edition of the Ford Focus - a compact vehicle belonging to the sports utility vehicle (SUV) category, beginning June of 2019, the report from the Wall Street Journal said.
In a statement released by Ford, the Dearborn, Michigan-based car firm said that the tariffs imposed by the Trump administration would cut into the profits too much.
Ford North America chief, Kumar Galhotra told the press during a media conference that the "negative financial impact" of the Trump tariffs into Ford's importation plans forced the company to call off its deal with China, according to Detroit Free Press.
As stated by the report, Ford is now moving to replace the 20-year-old compact car segment, Focus, with a newer version called the Ford Active in the US. Active was supposed to arrive in the North American showrooms in the late summer of 2019.
However, with the cancellation of the outsourcing project, it looks like the window for release will be pushed back at a much later date.
Galhotra said it all boils down to how the company can effectively "deploy" its resources. By resources, he meant the "capital resources." As what the Ford chief suggested, it appears that the carmaker now has other avenues to allocate these funds.
It remains to be seen though if Ford would also be shelving the Ford Active project, following the failed importation deal with China.
Trump's Trade War
In July, the POTUS signed yet another policy hitting China-built automobiles coming to the US with an additional 25 percent tariff, Bloomberg said.
Analysts are now expressing their concerns as to how this will shape up the auto industry. Kristin Dziczek, VP of labor and economics at the Center for Automotive Research, told DFP that it is highly likely that automakers around the world will pull out from the American car market if the high tariffs continue to take effect.
As Dziczek said, the disappearance of competition from abroad would delimit consumer choices and this could allow domestic manufacturers to raise car prices.
