Trump's 35% Import Tariff Would Hurt U.S. Economy: Ford CEO

It’s hard to imagine that any U.S. car maker watched the 2016 presidential election more closely than Ford Motor Co. The stakes were high for all of Detroit’s Big 3 automakers and car makers in general who manufacture part of their fleets in Mexico and, to a lesser extent, Canada, but the outcome was doubly personal for Ford. President-elect Donald J. Trump repeatedly made Dearborn-based Ford the poster child for what he sees is wrong with U.S. trade laws and manufacturing losses.

The strategy worked in Michigan and other Rust Belt states that haven’t fully recovered after shedding thousands of jobs during the recession and losing other jobs to factories primarily in Mexico, where lower-profit cars can be manufactured at a fraction of the cost of U.S. labor and shipped back to the United States under trade pacts that all but eliminate tariffs.

Singling out Ford for its decision to move all small car production south of the border by the end of 2017, Trump has proposed tariffs as high as 35 percent under a retooled trade agreement. He once said that if Ford resisted, the tariff would increase.

Ford CEO Mark Fields said Tuesday at a Los Angeles auto show, where he was keynote speaker, that the tariff Trump has proposed on cars and trucks imported from Mexico would cause reverberations throughout the economy. Any such tariff would have to be broadly imposed on the auto industry. Action specifically targeting Ford or Mexico is against the governing rules of the World Trade Organization.

“A tariff like that would be imposed on the entire auto sector, and that could have a huge impact on the U.S. economy," Fields said.

Fields told The Detroit News officials have been in “constant communication” with Trump’s transition team. Fields said he sent a Trump a letter congratulating him on his victory but didn’t say if Trump had responded.

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Though Fields said Ford officials are looking forward to working with Trump and a new Congress, Ford is a global company and fierce advocate of free trade, he said. Trump has vowed to dismantle the North American Free Trade Agreement or negotiate a better deal with Mexico and Canada. Fields said the automaker and Trump may be able to find common ground in their shared opposition to the Trans Pacific Partnership, an agreement between a dozen countries that the United States signed this year but which has not been approved by Congress.

“I continue to be convinced that the right policies will prevail, because we all share the same objective, which is a healthy and vibrant U.S. economy,” Fields said.

“We have a proven track record of working with policymakers going all the way back to Teddy Roosevelt, when we were first formed,” he said. “So we expect to work very efficiently and positively with the president-elect administration as well as the new Congress.”

Last week, a lobbying group for the auto industry asked Trump to relax gas mileage standards put in place by the Obama administration and bring them in line with market realities.

Photo via Creative Commons