Ford CEO Mark Fields has strongly supported US President Donald Trump’s swift action this week to sign an executive order to take the US out of the Trans-Pacific Partnership (TPP) trade deal.
In remarks made after the heads of the Detroit Three met with Trump yesterday, Fields referred specifically to the TPP and focused on its failure to deal with currency manipulation, something he described as the ‘mother of all trade barriers’.
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“I would just call out the President’s decision to withdraw from the TPP,” Fields said as he addressed reporters outside the White House. “We have been very vocal, as an industry and a company, and we have repeatedly said that the mother of all trade barriers is currency manipulation.
“TPP failed in dealing meaningfully with that and we appreciate the President’s courage to walk away from a bad trade deal.”
Fields also sees benefits for the auto industry ahead in terms of the direction of the new administration’s economic policies.
“We are very encouraged by the President and the economic policies that he is forwarding,” Fields said.
“As an industry we are excited about working together with the President and his administration on tax policies, on regulation and on trade to really create a renaissance in American manufacturing.”
Many analysts saw TPP as a forerunner for a big proposed trade deal between the US and EU (Transatlantic Trade and Investment Partnership (TTIP)). Ford and other US automotive manufacturers have spoken in favour of that trade deal as a way to reduce costs, harmonise standards and boost trade. However, Trump’s attitude to international trade deals has been highly critical.
The United States’ trade arrangements with other countries are emerging as a controversial policy area in what many see as a much more protectionist trade stance from the new administration in Washington. Trump has also been very vocal on the issue of manufacturing jobs moved by US corporations to low-cost Mexico, facilitated by free trade under NAFTA. He has criticised a number of automotive manufacturers, including Ford, for their Mexican investments and threatened to impose 35% tariffs on vehicles imported to the US from Mexico.
Ford recently cancelled plans to build a new plant in Mexico and said it would be raising its investment in US production facilities. Trump has described NAFTA as the ‘worst trade deal ever’ and said that NAFTA needs to be scrapped or renegotiated, something that could add to Detroit Three costs and impact competitiveness.
A further concern for the industry is the possibility of a trade war with China – with Trump threatening new import tariffs on Chinese imports of up to 45% due to unfair trade terms. The world’s largest car market has become a valuable source of profitable revenue growth for automakers around the world – including the Detroit Three.
Analysts note that TPP, unlike NAFTA, is of relatively little consequence for the auto industry. The two biggest participants were to be the US and Japan, with trade flows of finished vehicles relatively low between those two markets. The big Japanese OEMs have long had a strategy to build plants in the US to ease trade tensions and overcome trade barriers. US automakers have pretty much given up (Ford threw in the towel early last year) on selling substantial numbers of vehicles in Japan (a high distribution costs market with very low import penetration, the low numbers dominated by German premium marques).
See also:
Trump tells Big 3 CEOs he wants more US plants, production and jobs
Trump takes US out of TPP, reiterates ‘border tax’ threat
ANALYSIS: What does TPP mean for autos?
