Ford executive says may boost production in China to avoid tariffs

Hinrichs said there was no business case for exporting autos to China with tariffs now reaching 40 per cent. (Photo: AFP/Bill Pugliano)

Joseph Hinrichs, Ford's executive vice president for global operations, said he did not see any easy resolution to the trade dispute between the United States and China.

President Donald Trump on Monday imposed tariffs on an additional US$200 billion in Chinese goods, prompting swift retaliation from Beijing on US$60 billion in US products.

"I believe this US-China discussion will go on for a while," Hinrichs said.

With tariffs on vehicles exported to China now reaching 40 per cent, there is no business case for exporting vehicles from the United States, he said.

"China is a very important market for us," he said. "You're talking about two very powerful economies so we're going to have to plan accordingly."

Hinrichs also said he hoped a breakthrough on a revised North American Free Trade Agreement could be achieved this week on the sidelines of the United Nations General Assembly in New York to keep Canada in the continental trade pact.

"We need a three-way auto agreement," Hinrichs said, noting that the deal struck last month between the United States and Mexico could serve as a basis for a more complete agreement that includes Canada.

"I'm worried a little bit that time will catch up with us," he said at a luncheon, noting that he has spent more time in Washington DC working on trade issues than ever before.

US and Canadian negotiators have spent more than a month trying to resolve remaining differences after Washington sealed a tentative deal with Mexico City which they intend to sign by Dec 1, when a new government takes office.

The auto industry is key to NAFTA and the free trade deal is critical to the North American supply chain. Hinrichs said that while "the language of US-Mexico trade agreement should work for Canada" in the auto sector, the remaining sticking points center on other topics like lumber, dairy and cultural issues.