Trump touted the decision with a weekend tweet, noting that the car "can now be BUILT IN THE U.S.A."
Ford almost immediately hit back, noting that it would not be profitable to build the car in the US for such a niche market where there is heavy competition.
The US remains a relatively expensive place to manufacture things, especially if you don't have economies of scale, and this is a clear example of how there's no clear-cut win-lose dynamic to US-China trade relations.
The beneficiaries in Ford's case may be its European and Japanese competitors.
Trump's previous commendations of companies' investments in the US were usually based on corporate press releases heavy on fluff and a recycling of existing expansion plans, but they at least had some sort of factual underbelly, however strained. The same cannot be said of Trump's Ford tweet.
That's telling, and betrays a flawed logic that is rather worrisome as Trump contemplates tariffs on US$267 billion ($408.8b) of Chinese goods in addition to the US$200b of levies his Administration looks set to put in place soon.
Trump took a similar tack with Apple. The technology giant warned last week that proposed US tariffs would force it to raise prices for products including the Apple Watch and AirPods headphones. Trump's response: "Make your products in the United States instead of China. Start building new plants now. Exciting!"
The odds of Apple itself building new plants anywhere in the world are quite slim. The company has one plant of its own in Cork, Ireland. Elsewhere, it largely relies on contract manufacturers, including Foxconn, which did in fact recently break ground on a new manufacturing facility in Wisconsin — albeit thanks to heavy subsidies from the Government.
We are still waiting for the "three big plants" that Trump last year claimed Apple chief executive Tim Cook had promised to build.
Apple has created a US$5b fund to encourage innovation among its domestic suppliers, which are themselves getting caught in the trade crossfire.
In an almost schoolmarm tone, Apple explained yet again that each of its products contains American-made parts or materials and that the goods are labelled Chinese imports only because final assembly takes place in that country.
The result is that "the burden of the proposed tariffs will fall much more heavily on the United States than on China," it said in a letter to US trade representative Robert Lighthizer.
Intel raised a different issue, arguing that the tariffs would make it more expensive and complicated for companies to make the necessary infrastructure investments to launch cutting-edge 5G technology.
Relocating supply chains is a lot more time-intensive and expensive than firing off a tweet.
Eventually, Trump's trade wars will force multinational companies to adjust their price-arbitrage analyses, and who knows, maybe in some cases that will mean shifting production to the US. But at what cost?
If such rejigging makes US companies less competitive, any local jobs they may have created could become redundant anyway.
- Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies.
- Bloomberg
