How Well Does Trump Understand What's Happening Within the Auto Industry?

Matt Posky
by Matt Posky
how well does trump understand whats happening within the auto industry

President Donald Trump jumped on Twitter Sunday morning to rattle off a series of musings I couldn’t have cared less about. However, mixed in with the rest of them, was a reference to last month’s news that Ford abandoned its plans to import the Chinese-built Focus Active into the United States.

“‘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 said in reference to a CNBC article from August. “This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs!”

Whether or not you support the president, he has made a genuine effort to convince automakers to do their manufacturing within the United States. However, his comments on the matter make it seem as if he’s a tad confused on how things actually work. Perhaps we can attribute his statement to an unbridled optimism or a tongue-in-cheek jab at Ford. Otherwise, the only explanation is that he doesn’t have the best understanding of what’s happening with the industry — which would be mildly alarming.

In 2017, Ford’s plan was to move Focus production out of Michigan and into a new facility in Mexico to save itself some cash. That strategy was later scrapped after NAFTA’s future began to look less promising and the company decided to shift production to China.

As you probably already know, Ford has vowed to gradually eliminate every 4-door car from it’s U.S. lineup to focus primarily on utility vehicles. The Chinese-built Focus Active, which is fundamentally a crossover, was to be the company’s only exception. However, Trump’s last round of auto tariff threats appears to have frightened the automaker away from the idea.

That makes it difficult to see if the president’s comments were a roundabout way of saying Ford should have stayed in the U.S. or a total misunderstanding of the situation. Normally, that would be fine. It’s unfair to expect a politician to be an expert on every single industry, but Trump made the automotive sector one of his pet projects since his first week in office. He should really have his finger on the pulse here.

However, Ford’s official reasons for ditching to the Focus Active have everything to do with the economics of business. “It basically boils down to how we deploy our resources,” Kumar Galhotra, president of Ford North America, explained. He said the introduction of new tariffs would result in the Focus Active’s U.S. price being “substantially higher.”

Ultimately, the comment was not a catastrophic faux pas on Trump’s part. But it does force up an eyebrow uncomfortably high on the head. The president doesn’t have to know the ins and outs of every manufacturer to have an informed opinion. However, if he’s going to be taking such an active role in shaping the auto industry’s future, we’d like to at least feel as if he’s plugged into what’s happening.

[Image: Ford Motor Co.]

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  • Epc Epc on Sep 10, 2018

    Trump the Businessman has known only 2 businesses: real estate & reality TV. In the former he has been bankrupt several times. In between his bankruptcies he drove many small businesses / contractors into bankruptcies by refusing to pay for work performed. In the latter, he has been successful. Trump's personal knowledge of international trade is limited to hiring cheap foreign workers for his ventures, and sourcing trinkets from China. Everything in the first paragraph is verifiable fact.

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    • Mirko Reinhardt Mirko Reinhardt on Sep 11, 2018

      @don1967 His personal fortune is not really verifiable fact, as he has not disclosed his tax returns, the first President since Nixon to not have done so. He could have amassed a huge fortune, a huge debt or everything in between. We don't know. Not verifiable facts.

  • Don1967 Don1967 on Sep 11, 2018

    When Steve Jobs played loose with the facts and demanded the impossible they called it a Reality Distortion Field. They said he was a visionary - a force of nature - and they idolized him for it. When Donald Trump does the same thing they call him an idiot, and they shut their eyes to the massive economic expansion and unprecedented progress towards world peace happening right out there in plain view. They're too busy creating imaginary villains in every shadow. As Scott Adams argues, it's like everyone's staring at the same screen but seeing two different movies. Future historians and social psychologists are going to have a field day with this one.

  • Tassos While Acura was the first Japanese attempt to sell 'luxury' (or "premium") vehicles in the US market, and despite its original good success in the near-luxury segment with the Legend and the far smaller and less expensive Itegra (a glorified Civic), it later lost its momentum and offered a series of underwhelming vehicles. It sure is not a LUXURY maker, and as long as it offers FWD or AWD and NOT RWD vehicles, it will never be taken seriously as a serious sports cars maker. Infiniti is much worse, and if both of them go under, few will notice. Lexus was more successful, offering pimped up TOyotas for 10,000s more, but there is NO vehicle in their lineup, esp now that they scewed up the only serious entry (the LS), that I would care to consider. AND I say all this as a very satisfied owner of 5-speed Honda coupes and hatchbacks (a 1991 Civic hatch and a 1990 Accord Coupe).
  • Mike Beranek Yet another reason to accelerate the transition to electric vehicles charged with energy from wind & solar with modern, non-Monty Burns nuclear as a backup.
  • Tassos The cap the timid Western Europeans agreed to, a HIGH $60, which still lets Putin make a TON of billions of $, was way too HIGH. Ukraine correctly complained about this, it had asked for a $20 cap, I believe.
  • FreedMike "...I wouldn’t recommend holding your breath until fuel prices drop."Regular is $2.87 at my local gas station today. Considering that it was over four bucks this summer, I'd call that a drop. And it happened with the war still going on, the GOP not taking over Congress, Dark Brandon in the White House, and the Theoretical Keystone Pipeline still being canned. Imagine that. And I wonder if poor Slavuta has broken out the "will rap for food" sign yet.
  • THX1136 I would imagine the caps will have minimal impact. Putin is going to do what he wants to do regardless of how the citizens of his country fare.