BS BULLETIN:
- Ford plans to phase out Chinese-built Lincoln imports and expand U.S. production beginning in 2030.
- The company expects the move to support thousands of direct and indirect American jobs.
- Ford CEO Jim Farley says tariffs helped drive the decision.
For years, Americans were told that manufacturing jobs moving overseas were simply the inevitable price of globalization. Apparently “inevitable” has a tariff rate.
Ford Motor Company is preparing to shift production of Lincoln vehicles sold in the United States away from China and back onto American soil, a move the automaker says will eventually support thousands of direct and indirect U.S. jobs. Beginning in 2030, Ford plans to expand domestic Lincoln production and eventually stop importing Chinese-built Lincoln vehicles for American customers.
Ford CEO Jim Farley told Reuters the decision was difficult but necessary to strengthen America’s manufacturing base. And one reason for the change isn’t particularly mysterious. Tariffs.
The Lincoln Nautilus — Ford’s primary China-built vehicle imported into the United States — currently faces a whopping 52.5% U.S. tariff. Farley told Reuters that tariffs played a role in Ford’s decision, along with a federal rule restricting certain Chinese technology from vehicles sold in the United States.
Commerce Secretary Howard Lutnick is already taking a victory lap. “Ford is bringing Lincoln back from China,” Lutnick said during an appearance on Fox Business, predicting “thousands and thousands of jobs” as production expands domestically.
Ford itself is somewhat more cautious. The company says the move is expected to generate thousands of direct and indirect jobs, but it has not yet announced exactly which American plants will receive the additional Lincoln production or disclosed the investment required.
The production expansion begins in 2030. Still, the direction represents a striking reversal. Ford sold more than 34,000 China-built Lincoln Nautilus SUVs in the United States last year, according to Reuters. Under the new strategy, American-market Lincolns will increasingly be built by American workers instead.
The decision also comes as Ford has been warning Washington about the enormous competitive challenge posed by China. Farley has described the global manufacturing competition as a “war,” warning that China wants American manufacturing jobs while U.S. companies struggle to find enough skilled workers. “We have about 400,000 people that we need,” Farley said earlier this year while discussing America’s skilled-trades shortage.
Ford has simultaneously been expanding other parts of its domestic manufacturing footprint. Farley recently highlighted plans for more than 2,000 additional U.S. jobs connected to new affordable hybrid and electric vehicles.
There are legitimate questions surrounding Trump’s tariff strategy, including higher costs for manufacturers that rely on imported components. American automakers have also been lobbying the administration over proposed changes to North American trade rules that they say could add billions of dollars in costs.
But Ford’s Lincoln decision gives the White House a powerful exhibit for the other side of the argument. Tariffs are supposed to change economic behavior. In this case, a 52.5% tariff helped make building an American luxury vehicle in China and shipping it back to American consumers considerably less attractive.
So Ford changed its behavior. Funny how incentives work.
MY QUICK TAKE
Wait a minute.
I was reliably informed that tariffs never work. Apparently somebody forgot to tell Ford. Build the Lincoln in China, ship it halfway around the planet and pay a 52.5% tariff? Or build the Lincoln in America with American workers? Ford stared at the calculator and suddenly discovered patriotism.
Now, let’s keep the champagne corked until those factories are actually humming in 2030. Announcing American jobs and creating American jobs are two different things.
But if those Lincolns roll off American assembly lines instead of Chinese ones, I’m perfectly willing to say something unfashionable in polite economic circles: Welcome home.
DBS WIRE SOURCES:
- Fox Business — Ford’s U.S. manufacturing expansion to bring ‘thousands and thousands of jobs,’ Lutnick says
- Fox Business — Ford boosts U.S. Lincoln production as it phases out imports from China
- Reuters — Ford to move production of some Lincoln models from China to U.S.
- Reuters — U.S. automakers try to avoid Mexico-Canada trade pothole
