2011 Ford Motor Co. Flex sport utility vehicles (SUV) sit on display at the Capital Ford dealership in Raleigh, N.C. on Feb. 26, 2011.
Photo by Jim R. Bounds/Bloomberg/Getty

Ford's production decision causes a political headache for Trump

In early February, just a couple of weeks into his presidency, Donald Trump appeared on Fox News and boasted about Ford Motor Company's decision not to expand production at a new plant in Mexico.

"We're losing our jobs to Mexico," Trump argued, adding, "And I have to tell you I've turned it around, already I've turned it around, you see that. Ford has been phenomenal. They canceled the plan."

What the president neglected to mention is Ford's new plan. The New York Times reported that the American auto giant will "build its next-generation small car in China rather than in the United States or Mexico."

Last year, the company said it planned to shift Focus production to a plant under construction in Mexico, primarily because of lower labor costs. But Ford canceled the project in January after it met stiff opposition from President Trump, who had repeatedly criticized the company for investing in Mexican jobs at the expense of American ones.

Now Ford, the nation's second-largest automaker, after General Motors, is centralizing much of its small-car production in China, where it has available capacity.

This appears to have been a straightforward business decision, unrelated to political pressures. A Wall Street Journal report noted that Ford expects to save $500 million by building its next-generation Focus in China, as compared to the original Mexican plan.

And while it wouldn't be fair to blame the White House for the auto maker's latest move, it does create a political headache for the president who was a little too eager to boast about Ford scrapping its plans south of the border.

During the campaign, Trump said he believed Ford would abandon its production plans in Mexico "because of my constant badgering." After the campaign, the Republican publicly thanked Ford "for scrapping a new plant in Mexico."

Evidently, he didn't realize the auto maker would cancel plans for producing in one foreign country, only to choose a different foreign country.

Also note, this is exactly the kind of business dynamic the president vowed to address: an American company, making products abroad, and then bringing those products back to be sold to American consumers.

Perhaps Trump's "constant badgering" wasn't as effective as he thought?