Ford Motor Company, the second-largest U.S. automaker, is hurting big time from Trump's tariff war on China and is defending itself as best it can with measures the U.S. president will call "unpatriotic."
Executive vice president for global operations Joseph Hinrichs said Ford will accelerate plans to build more of its luxury Lincoln models in Chinese plants as the increasingly acrimonious trade war with the United States makes American cars and other American exports more expensive and therefore less attractive to potential buyers.
The 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. Trump on Sept. 24 imposed 10 percent tariffs on an additional $200 billion worth of Chinese exports, prompting rapid retaliation from Beijing on $60 billion in American products.
Hinrichs said Ford has long been advocates for 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 said 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 leaves Ford with one option: produce more of its cars in China.
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.
Ford brought the luxury Lincoln brand to China in 2014. 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.
