New York: US automakers found themselves in the political hot seat Tuesday, with President-elect Donald Trump lambasting GM for importing Mexican-made cars into the United States and Ford scrapping plans for a new plant south of the border.
Trump, who won the presidency in part with tough talk on trade, has shown his willingness to single out individual companies by name if they displease him, and Ford seems to be the latest to fall in line.
Also on Tuesday, Trump nominated Reagan-era protectionist lawyer Robert Lighthizer to serve as US trade representative, signaling he intends to make good on pledges to renegotiate trade deals he blames for killing millions of American jobs.
The moves likely will loom large over next week’s Detroit auto show, when the US industry’s top executives gather to show off their new models.
The president-elect, who has previously taken to Twitter to slam Boeing and Lockheed Martin, made GM his latest target in a breakfast-hour tweet threatening to impose tariff on imports of a small number of Mexican-made Chevy Cruze models into the US.
About-face at Ford
A couple of hours later, Ford announced it was scuttling plans for a new $1.6 billion factory in San Luis Potosi, and instead invest $700 million over the next four years to expand its Flat Rock Assembly Plant in Michigan to build electric and self-driving vehicles.
The Ford decision was an about-face after the second-biggest US automaker repeatedly rebuffed Trump’s criticism over its plans for the Mexico plant during and after the presidential campaign.
Ford chief executive Mark Fields said the decision reflected the hope that Trump’s policies will boost the US manufacturing environment.
“It’s literally a vote of confidence around some of the pro-growth policies that he has been outlining and that’s why we’re making this decision to invest here in the US and our plant here in Michigan,” Fields told CNN.
He said company chairman Bill Ford spoke Tuesday morning to Trump, and that he himself had spoken to Vice-President-elect Pence about the move, which Ford said would result in 700 new US jobs over four years.
The new plant, announced in April, was expected to employ 2,800 by 2020. Mexico’s government said it “regrets” Ford’s decision, and that the company gave assurances it would repay “any expenditures made by the state government to facilitate this investment.”
Another win for Trump?
Trump took to Twitter again to crow about the Ford reversal: “Instead of driving jobs and wealth away, AMERICA will become the world’s great magnet for INNOVATION & JOB CREATION.”
Ford’s decision creates a “political headline win for Trump, Ford and the UAW,” yet the diminished demand for small cars also makes it a positive decision in terms of business rationale, investment bank RBC Capital Markets said in a note.
Meanwhile, GM responded to Trump’s Twitter attack with a statement emphasizing that the vast majority of its Cruze cars sold in the US are made in Ohio, with just a small percentage imported from a plant across the southern border.
“All Chevrolet Cruze sedans sold in the US are built in GM’s assembly plant in Lordstown, Ohio,” the auto giant said.
Of 190,000 Cruze cars sold in the US, only 4,500 were hatchbacks made in Mexico, said a GM spokesman.
Trade war coming?
Tough talk on trade helped Trump win election, and on the campaign trail he threatened to impose a 35 percent import duty on cars produced in Mexico.
He has also pledged to tear up the North American Free Trade Agreement with Canada and Mexico, blaming NAFTA and other trade agreements for the loss of millions of American manufacturing jobs.
The appointment of Lighthizer as his top trade negotiator suggests Trump plans to follow through on that rhetoric.
Lighthizer served as deputy US trade representative in the Ronald Reagan administration in the 1980s, when the focus was on attacking Japan for its huge exports into the US market.
But leading business lobbies such as the Business Roundtable have cautioned that US trading partners could retaliate against any new tariffs, threatening key US markets.
“Any significant tariff increase within the North American region would impact the auto industry greatly and that just really makes the industry... much less competitive,” said Christopher Wilson, deputy director of Mexico Institute at the Wilson Center, a Washington think tank.
Automakers are also worried that Trump’s tough rhetoric towards China could trigger a full-scale trade war if the Republican makes good on threats to impose punitive tariffs on Beijing.
