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US Automakers Abscond Vehicle Importation Amidst Tariff Hike

The new tariffs on Chinese imports may have changed everything about sedan car sells in the US market. Ford is dismissing any idea of producing its sedan lineups locally despite Trump’s “BUILT IN THE U.S.A.” tweet due to business economies. Other US automakers are not thinking differently.
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Ford last month announced it has called off plans to import Chinese-built Focus Active into the United States, in efforts to escape financial losses or impose unnecessary prices on buyers. The information, which came through the automaker’s head of operations in North American, according to CNBC has caught public opinion after President Donald Trump on Sunday morning responded to the statement on Twitter.

“‘Ford has abruptly killed a plan to sell a Chinese-made small vehicle in the U.S. because of the prospect of higher U.S. Tariffs,'” Trump tweeted referencing CNBC August article. “This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs!”

The decision by President Donald Trump is only a genuine effort to encourage local manufacturing of vehicles by US automakers. Regardless of how some market analysts or players try to understand his comments or decision, the Trump administration through some “odd” decisions has achieved new heights in the history of the US economy. Every business player in varied sectors consistently seeks for loopholes to generate more revenue without scoring the economic impact. That’s where government’s decision is very crucial to ensure stability and a balanced growth.

Business means spending less to earn more

Ford had planned moving Focus production to its proposed $1.6 billion plant in San Luis Potosi, Mexico in 2017 but scrapped the idea after the future of the North American Free Trade Agreement began to look less promising. The company had announced it was investing $700 million to expand Flat Rock, Michigan for the production but later moved the production to China in its efforts to save more money.

However, Ford is no longer relying on 4-door cars in the US market. In April, the company revealed plans to gradually eliminate sedan cars in the US market, except Mustang and focus on SUVs. FCA and GM are also making the same plan – not to sale sedan cars in the US market.

The Chinese-built Focus Active would have been an exception if it had made entry into the US market but the automaker killed the idea after being frightened by Trump’s last round of auto tariff. Ford made it clear that its reason for abandoning the move to import the Focus Active is about the economics of business.

The president of Ford North America, Kumar Galhotra, admitted “it basically boils down to how we deploy our resources,” the US price for Focus Active would be “substantially higher” due to the new tariffs, he said.

Ford’s way of dealing with the newly imposed 25% tax on $34bn in Chinese imports is to completely ditch sedan sales in the US market and other US automakers are not taking a different side.

China is deploying greedy tactics in what represents a clash between the world’s two biggest economies. It’s retaliating with its own tariffs on US products while also deploying outright cybertheft to challenge American technological dominance and acquire technology from US companies.

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