Ford Halts Vehicle Shipments to China as Trade War Escalates
Auto giant Ford (F) has halted the shipments of its vehicles to China as the trade war between Beijing and Washington escalates. Following China’s retaliatory measures in response to the Trump administration’s U.S. import taxes, tariffs on vehicles exported to China have increased to as high as 150%. The news about Ford halting its shipments was first reported by The Wall Street Journal.
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Trade War Hits Ford’s Business
Ford is pausing shipments of its pricey pickup trucks, SUVs, and sports cars to China to avoid the elevated tariffs. In particular, the company has halted shipments of its F-150 Raptors, Mustangs, and Michigan-built Bronco SUVs, as well as Kentucky-made Lincoln Navigators, to China. Ford’s China exports represent a small but profitable business.
“We have adjusted exports from the U.S. to China in light of the current tariffs,” said the company in a statement.
It is worth noting that despite the pause on the exports of assembled vehicles, Ford is expected to continue to export its U.S.-built engines and transmissions to China. Additionally, shipments of the Lincoln Nautilus, a model imported from China by Ford and now subject to significant tariffs, will continue.
Ford has been leveraging its factories in China as an export hub. It ships its cars to Southeast Asia and South America from China. Aside from the lofty tariffs, Ford’s business in China has also been under pressure due to intense competition from other global automakers.
Is Ford a Good Stock to Buy?
Compared to several other automakers, Ford is well-positioned to withstand tariffs, as it produces about 80% of its U.S.-sold vehicles domestically. However, macro pressures, the ongoing trade wars, and growing rivalry are weighing on Wall Street’s sentiment for Ford and the auto sector in general.
Overall, Wall Street has a Hold consensus rating on Ford stock based on three Buys, nine Holds, and three Sell recommendations. The average F stock price target of $9.46 implies a downside of about 2% from current levels. Ford stock has declined 20% over the past year.
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