Washington: President-elect Donald Trump criticised General Motors Co. for building a version of the Chevrolet Cruze compact in Mexico, saying the largest US automaker should build the car at home or face a hefty tariff.
“General Motors is sending Mexican made model of Chevy Cruze to US car dealers-tax free across border,” Trump tweeted Tuesday. “Make in U.S.A. or pay big border tax!”
Every Cruze sedan is built in Ohio and most of GM’s Mexican-made hatchbacks are exported to global markets, said Tony Cervone, a company spokesman. He declined to comment on whether the company planned to talk to Trump.
Trump’s tweet is the latest example of interventionist behavior toward U.S. companies that have included Boeing Co., Lockheed Martin Corp. and United Technologies Corp. His threats against Mexican-built vehicles have the potential to impact the nine global carmakers, including Toyota Motor Corp. and Nissan Motor Co., that have announced more than $24 billion in Mexico investments since 2010. Volkswagen AG’s Audi, BMW AG and Daimler AG each build or plan to assemble luxury vehicles, engines or heavy trucks in the country.
The Trump transition team has said Chief Executive Officer Mary Barra will be among the panel of business leaders giving him strategic advice on the economy after he takes office.
GM shares rose about 0.2 percent to $34.90 as of 9:31 a.m. in New York. The Detroit-based company said in November it planned to cut a shift at its Cruze plant in Ohio and furlough 1,200 workers there due to weak demand for small cars.
Trump has made a point of pressuring large U.S. manufacturers into keeping production in the U.S. He criticized Ford during the presidential campaign for moving production of the Ford Focus compact and C-Max hybrid to Mexico. In November, he said on Twitter he talked with Chairman Bill Ford and got the automaker to commit to keeping production of the Lincoln MKC sport utility vehicle in Kentucky instead of Mexico.
At the time, Trump indicated he’d saved the plant. In reality, the plant was not scheduled to close. Its employees assemble the Ford Escape SUV, a better-selling model. More than 5,000 employees work nearly around the clock on three crews to meet demand for the two SUVs.
Trump’s promise to make Mexico pay for a border wall seems less likely to be a burden in 2017 than his threat of retribution against companies that move jobs abroad. If that makes US manufacturers hold off or slow down investment in Mexico, the impact would be significant. More than half of the $30 billion in foreign direct investment in Mexico in 2015 came from the US. Already, Citigroup Inc. has cut its projections for total investment in Mexico from abroad for 2017, to $25 billion from $35.8 billion.
Perhaps Trump’s biggest impact will be on the peso, which became a proxy for his election chances. It’s tumbled about 11 per cent since the vote to near record lows, putting pressure on the central bank to intervene as inflation expectations rise.
Analysts say Mexico’s economy is in for a nightmare even if the incoming president doesn’t build that wall or ball up North American Free Trade Agreement.
Economists forecast gross domestic product will expand just 1.7 per cent this year, according to the latest surveys from Banco de Mexico and Citi/Banamex, as anticipated rate increases weigh on borrowing and spending. That’d be the slowest since the 1.4 per cent achieved in 2013.
“It’s going to be a very difficult year for policymakers,” said Benito Berber, the senior economist for Latin America at Nomura Holdings Inc. in New York. “The central bank will have to navigate a lot of different shocks, external and internal.”
While forecasts are more dire at Credit Suisse Group AG and Bank of America Corp. — where economists anticipate growth could be the slowest since the height of the financial crisis — any threat to the North American Free Trade Agreement that started January 1, 1994, would make these seem rosy. Mexico sends more than three-quarters of its exports to the US and ran a trade surplus of about $60 billion in 2015, accounting for more than 5 per cent of economic output. Trump lashed out at a US company manufacturing in Mexico early on Tuesday.
Trump Twitter crosshairs: The companies singled out — AP
Amazon
“If @amazon ever had to pay fair taxes, its stock would crash and it would crumble like a paper bag. The @washingtonpost scam is saving it!” Trump tweeted on December 7, 2015.
Carrier
“Big day on Thursday for Indiana and the great workers of that wonderful state. We will keep our companies and jobs in the US. Thanks Carrier.” Trump tweeted on November 29, 2016.
Ford Motor Co.
“Just got a call from my friend Bill Ford, Chairman of Ford, who advised me that he will be keeping the Lincoln plant in Kentucky — no Mexico. I worked hard with Bill Ford to keep the Lincoln plant in Kentucky. I owed it to the great State of Kentucky for their confidence in me!” Trump said in a series of tweets on November 17, 2016
Lockheed Martin Corp. and Boeing Co.
“Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!” Trump tweeted on December 22, 2016.
“Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!” Trump tweeted on December 6, 2016.
General Motors Co.
“General Motors is sending Mexican made model of Chevy Cruze to US car dealers-tax free across border. Make in USA or pay big border tax!” Trump tweeted on January 3, 2017.
Macy’s Inc.
“Good news, disloyal @Macys stock is in a total free fall. Don’t shop there for Christmas!” Trump tweeted on December 4, 2015.
T-Mobile US
.@JohnLegere @TMobile John, focus on running your company, I think the service is terrible! Try hiring some good managers. Trump tweeted on November 15, 2015
Rexnord
“Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers. This is happening all over our country. No more!” Trump tweeted on December 2, 2016.
Businesses in General
“The US is going to substantially reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees builds a new factory or plant in the other country, and then thinks it will sell its product back into the U. S ... without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies ... wanting to sell their product, cars, A.C. units, etc, back across the border. This tax will make leaving financially difficult, but ... but these companies are able to move between all 50 states and negotiate a tax free deal! Our country cannot keep losing these jobs, & won’t. These companies are able to move between all 50 states, with no tax or tariff being charged. Please be forewarned before making a very ... expensive mistake! THE UNITED STATES IS OPEN FOR BUSINESS.” Trump said in a series of tweets on December 4, 2016.
