Published: Tue, September 11, 2018
Finance | By Kristine Clayton

U.S., Europe optimism helps global stock index dodge trade war dread


In August, Ford announced it had kill its plan to import the new Focus, citing Trump's tariffs on Chinese imports as the reason for the maneuver. This meant that the likes of the Focus hatchback and the Fusion, Fiesta and the larger Taurus sedan would be cut from the lineup to be replaced by crossovers and SUVs across the board.

Shares of Apple Inc AAPL.O suppliers fell across Asia on Monday after U.S. President Donald Trump tweeted that the tech giant should make products in the United States if it wanted to avoid tariffs on Chinese imports.

Mr. Trump took to Twitter Sunday to declare victory and write: "This is just the beginning".

"The conclusion was for the iPhone (not now impacted by Tariffs) moving production (100% of final assembly) to the US would need 20% price increases to offset the incremental labor costs", analyst Wamsi Mohan wrote.

Under this new vision for the Ford lineup, only two passenger cars would be sold in the US: the Mustang, an instantly recognizable sports auto and symbol, and the China-made Focus Active. He added, "Ford is proud to employ more US hourly workers and build more vehicles in the USA than any other automaker".

According to industry analyst Ed Kim from AutoPacific, there was a strong chance the Focus Active would have been sold in the United States if it wasn't for the tariffs.

"Without the tariffs, the business case was pretty solid for that model in the USA market", Kim said.

Trump tweets tariffs have forced Ford to build Focus in US. Mr. Trump insinuated in a weekend Twitter post that Ford would build the small auto in USA instead of importing it from China. Start building new plants now.

"This forces Ford to forfeit the sales they would have had if they could continue to import that low-volume niche vehicle", Gabrielsen said.

The tariffs changed everything. Trump said Friday he is considering another $267 billion of tariffs on China, which analysts said will affect virtually every category of consumer goods, to retaliate against what he calls unfair trade practices.

Ford, BMW, Mercedes and others export about 250,000 vehicles to China from the United States each year, Dziczek said.

The U.S. has imposed US$50 billion worth of tariffs on Chinese goods with another US$200 billion in the final stages.

Apple has written a letter to the Trump administration, saying the proposed $200 billion tariffs on China-made products will make the Apple Watch, AirPods headphones, HomePod smart speaker, Macs and key computer parts more expensive.

The world's two biggest economies are clashing over US allegations that China deploys predatory tactics - including outright cybertheft - to acquire technology from USA companies and challenge American technological dominance.

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