Analyzing Donald Trump’s Impact on Ford Motor Company and the Global Economy

Trumps Tariffs and Ford Motor Company

There are many problems that we face as a nation. We are on the edge of a total U.S. economic meltdown. The significant problem that I have researched is the trade tariffs and Ford Motor Company not being able to make cars in the U.S. There are several problems here that will need to be addressed. There are also several possible solutions that could save the company money in the long run. Ford Motor Company will see if it is lucrative to continue building in China or find another low-wage country to continue production. If the tariffs and interest rates on steel continue to climb, they will have no choice. We need to take a strong look at the history and franchise of Ford Motor Company and how this affects our economy and nation as a whole. We also need to take a look at Donald Trump’s trade tariffs and what exactly the details include affecting many automakers. Several questions will arise, such as where these automakers will go to further production and what they will cost.

Ford Motor Company

Ford Motor Company is an American automaker headquartered in Dearborn, Michigan. It was founded by Henry Ford; the company sells automobiles and other commercial vehicles under the Ford brand. As of today, Ford is the second largest U.S. automaker, right behind General Motors, and they are the fifth largest in the world. During the year 2008, Ford employed 213,000 employees and produced 5.32 million automobiles at around 90 plants around the world. According to USA Today’s Detroit Free Press staff, Donald Trump’s China tariffs will cost Ford 1 billion U.S. dollars.

Jim Hackett, who recently spoke with Bloomberg Television, said the company faces a huge loss in profits from the president’s tariffs. He is also quoted as saying, “The metals tariffs took about 1 billion in profit from the U.S- 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.” It is clear that Ford and other companies are not happy with the recently imposed tariffs. This will affect the company’s bottom line and potentially hurt profits across the board. There are many companies that rely on importing and exporting as a way of doing business. However, with this disruption in the way the U.S. does business with the rest of the world, it could be costly in the long run for companies worldwide.

Trump

Donald Trump is the 45th and current president of the United States of America. His socially awkward behavior and disruptive tariffs have caused quite a stir in the global market. Trump’s unorthodox strategy is the complete opposite of any other administration that has held office in the White House. It seems as though his main objective is opening up the Chinese market and preserving a U.S. advantage over China to demand dominance on the world stage. It could potentially be preserved that Trump’s strategy in threatening tariffs on Chinese imports is addressing his goal of reducing the U.S. trade deficit with China. He also wants to bring back manufacturing jobs to the U.S. It is seen that the U.S. trade deficit is domestic and not external.

The fact is that Americans consume more than they produce. This is the sole reason why we must rely on foreign countries because we consume so many products, and we don’t have the resources to replenish all that we consume. If we get into a trade war with foreign countries, it could potentially threaten our economy and directly impact many of our large corporations. We must take a look at how we have been successful as a country over the past decades and what we have done right in order to maintain stability. Trump seems to be more interested in making enemies and not seeing the bigger financial picture that has kept our nation running on all four cylinders. Trump will need to stop tweeting and making the wrong decisions based on personal feelings and not what is best for America.

It seems that Donald Trump has been targeting China specifically due to the fact he believes the U.S. has been treated unfairly and China has been profiting off the U.S. market. He has been on many news outlets displaying and verbally denouncing China; they have been using U.S. products and counterfeiting many of our goods. Due to the fact Trump’s administration believes China is one of the most notorious for sales of pirated and counterfeit goods, they are taking retaliatory action against China. According to the South China Morning Post, Gao Feng, commerce ministry spokesman, is quoted as saying, “We have to question the objectivity and credibility of the relevant US department in issuing its report.” “The Chinese government has always attached great importance to the protection of intellectual property, the results of which are obvious to all.”

Tariffs

We first must look at what a tariff is and how it affects countries on a global scale. Tariffs also affect our economy, given the employment or unemployment rates worldwide. A tariff is defined as a tax or duty to be paid on a particular class of imports or exports. This is also known as a duty or trade barrier. The main purpose of a tariff is to protect jobs and production for citizens. Tariffs are also put in place to ensure that a certain number of the specific product or good is limited to entering the country. According to Investor’s Business Daily, as of 2018, President Trump was the first ever president to wage war and use tariffs as a way to try and disrupt the flow of trade. He initially did this with the reasoning of trying to reduce the U.S. trade deficit of 566 billion. He also thought this would increase production and manufacturing jobs. President Donald Trump enforced 25% U.S. tariffs on 50 billion dollars worth of Chinese imports.

This outrageous tax caused China to retaliate and impose a tariff of its own. This is basically what started the slow decline of Ford Motor production, therefore leading Ford to manufacture cars on foreign soil. This could also lead to mass layoffs in the U.S. for Ford Motor Company employees. This plot by Donald Trump has not been a welcomed tax for many other companies, including corporate giant Walmart. The implementation of these tariffs will affect Walmart and other retailers in a negative way.

It will essentially result in a combination of higher prices and lower profits. The immediate effect on the customer is that they would pick up the tab if an increase is imposed. An example of this is if Walmart’s tariff was to increase by $6, they would pay $3, and the customer would pay the other half, essentially increasing the price of goods and costing the customer more to purchase products. This will directly affect the customer’s wallet, and Walmart’s profit will decline. Overall, Trump has imposed a total of 35% and 250 billion dollars’ worth of tariffs on Chinese goods.

References:

1. “Ford Go Further.” Ford Corporate. (2018). https://corporate.ford.com/articles/global-auto-shows/ford-china-collaboration.html
2. Staff, J. (2018). Ford Says Trump’s China Tariffs Could Cost Company $1B. Detroit Free Press. https://www.freep.com/story/money/cars/ford/2018/09/07/ford-trump-china-tariffs-cost/1226175002/
3. Wang, J. (2018). How Trump’s Trade War Went From 18 Products to 10,000. Quartz. https://qz.com/1327460/its-official-the-us-china-trade-war-has-now-begun
4. Graham, B. (2018). Trump’s Tariffs: What They Are And How They Will Work. Investor’s Business Daily. https://www.investors.com/politics/editorials/trumps-tariffs-what-they-are-how-they-work/
5. Graham, B. (2018). Trump’s Trade War Turns Walmart Strategy Upside Down. Investor’s Business Daily. https://www.investors.com/politics/editorials/trumps-trade-war-turns-walmart-strategy-upside-down/
6. China questions credibility of US report on fake goods after Donald Trump’s ‘fine’ threat. (2018). South China Morning Post. https://www.scmp.com/news/china/diplomacy-defence/article/2157490/china-questions-credibility-us-report-fake-goods-after