Published: Thu, September 13, 2018
Economy | By

Despite Trump’s tweet, Ford says it won’t make hatchback in US

Despite Trump’s tweet, Ford says it won’t make hatchback in US

Ford will not be moving production of a hatchback to the U.S. from China - despite Donald Trump's claim on Sunday that his taxes on Chinese imports mean the Focus Active can be built in America.

President Donald Trump threatened on Friday to attack China with tariffs on another $267 billion worth of goods. His comments on social media came a day after Apple's letter to U.S. Trade Representative Robert Lighthizer made news, indicating that proposed tariffs on $200 billion worth of imported Chinese goods would negatively impact sales of Apple's Watch, AirPod, Mac mini, and Pencil products.

Geng gave no details, but the government said in June it would impose unspecified "comprehensive measures" if necessary. The industry group Motor & Equipment Manufacturers Association has expressed concern over tariffs on raw metal, saying they have a destabilizing effect on USA manufacturing and that the process of asking for exemptions is "opaque, inconsistent and inaccessible". The company has not announced plans to move manufacturing from China to the U.S.

Mark Zandi, chief economist at Moody's Analytics, estimates that tariffs on $200 billion of Chinese imports, on top of previously enacted duties, would shave a quarter of a percentage point off the economy's growth over the next 12 months.

Chinese leaders agreed in May to narrow that trade gap by purchasing more American soybeans and other products. Ford rejected Trump's suggestion, saying it wouldn't be profitable. The vehicle will be built in both Chongqing, China, and Saarlouis, Germany, a Ford spokesman said in an interview on Monday. But Communist leaders see them as China's path to prosperity and global influence.

The proposed tariffs of up to 25 percent on specific products imported from China to the United States would hit "a wide range of Apple products", the company said, including its Mac mini computer, chargers, adapters, specialized manufacturing machinery and more. That might add to Washington's frustration and prompt more import controls.

The "easy solution" of moving production to the United States is anything but. Chinese imports of USA goods rose 11.1 per cent to $13.3 billion.

The key driver of China's surging surplus with the US is Trump's Keynesian stimulus when the economy was already near full capacity, said David Dollar, a former US Treasury attache in Beijing and now a senior fellow at the Brookings Institution in Washington.

Ford does not intend to start producing the small crossover Focus Active in the United States - no matter what the president has tweeted on the topic.

European stock markets rose and Wall Street was expected to open higher on Monday, despite a drop in Asia, where investors fretted over the possibility of new and bigger USA tariffs on Chinese goods. "And of course, the world needs both U.S. and China to prosper, for the world to do well". Last year, Made-in-China bras, girdles, corsets, suspenders and garters sent to the USA were worth $1.2 billion, according to trade data.

Beijing closed most of Lotte's 99 supermarkets and other outlets in China.

Congressional Republicans plan to unveil another round of tax cuts this week ahead of the November 6 elections, helping support USA equities.

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