Ford is canceling plans to make a new small SUV model in China and ship them back to the United States.
The automaker had planned to build the Focus Active SUV in China about this time next year. But the Trump administration's planned tariffs on Chinese imports would make the plan too expensive.
Ford (F) is scrapping the Focus Active, though it will continue to sell a sedan version of the Focus outside the United States. The company stopped building the traditional Focus sedan at a Michigan plant in May, to make room for two revitalized models: the Ranger small pickup truck and Bronco SUV.
Building the Focus Active at the Michigan plant didn't make sense because Ford anticipates selling less than 50,000 of the model here, said Kumar Galhotra, president of Ford North America, during a Detroit press conference Friday.
"Basically, this boils down to how we deploy our resources," said Galhotra. "Any program that we're working on requires resources — engineering resources, capital resources. Our resources could be better deployed at this stage."
American car buyers' growing preference for SUVs and pickups have flustered automakers. Ford announced earlier this year that it will drop sedans from its US product lineup other than its iconic Mustang muscle car.
Building small cars profitably at US plants is difficult because of the higher wages paid to workers compared to plants in Mexico and China. Ford had originally planned to shift production of the Focus to Mexico, then in June 2017 announced that it would build it at a plant in China that had excess capacity.
The Trump administration reached a preliminary agreement with Mexico earlier this week that could keep cars built in Mexico available to US buyers without expensive tariffs. But it has announced a series of tariffs on Chinese exports that would increase their cost by 25%.
