Trump, on Wednesday, threatened to impose new tariffs on auto imports as his latest response to General Motors’ decision to shutter U.S. factories and lay off workers, according to The Hill.
Using his Twitter account, the president argued that a “long-standing 25 percent tariff on light trucks” had boosted U.S. automakers and an additional 25 percent tariff on imported cars will do the same.
Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including….
— Donald J. Trump (@realDonaldTrump) November 27, 2018
”If we did that with cars coming in, many more cars would be built here and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress,” Trump wrote.
The president said major auto exporting countries “have taken advantage of the U.S. for decades and warned, “that the president has great power on this issue.”
”Because of the G.M. event, it is being studied now!” he wrote.
On Tuesday, Trump threatened to block payment of government electric vehicle subsidies to GM, something the president may not have the power to do, but he certainly made it clear he was going to try. Trump is pressuring GM to keep its small car plant in Ohio open, according to Reuters.
GM spokeswoman Kimberly Carpenter said on Tuesday: “We continuously look at our operations for opportunities to improve our efficiency and capacity utilization. We believe the actions announced yesterday move us in the right direction and we will continue to monitor the market and consumer trends and adjust accordingly.”
What about that 25 percent tariff?
Trump told a little lie today when he threatened to impose a 25 percent tariff on imported cars in response to GM’s move on Monday to shutter the five plants.
Some months ago, the U.S. Department of Commerce was ordered to turn in an investigation report on the need to impose additional tariffs on European and Asian cars. That report is now on Trump’s desk. The report recommends a 25 percent customs duty on car imports from all countries except Canada and Mexico.
Trump previously had decided to put off auto tariffs on Europe in exchange for the European Union agreeing to purchase more American soybeans. And as The Hill reports, the plant closures, along with a wobbly stock market and rising interests rates, appear to have sparked fears of an economic downturn – angering Trump, who views our economy as a reflection of his presidency.
Declining American interest in sedans
The sale of traditional cars in North America has been declining for the past six years and continue to decline. After GM closes its five plants in the U.S. and Canada, it will still have four plants open that include the plant in Fairfax, Kansas, which builds the Chevrolet Malibu and Cadillac XT4 compact SUV. This plant is running at 48 percent capacity.
GM’s plant in Lansing, Michigan, that builds the Cadillac ATS and CTS and Chevrolet Camaro is running at just 33 percent capacity, while the GM Orion Township, Michigan, facility that builds the Chevrolet Bolt electric car and the Chevrolet Sonic subcompact runs at 34 percent capacity. A Bowling Green, Kentucky, plant that builds the Chevrolet Corvette sports car works at just 27 percent of its potential output, according to LMC data.
There are consequences 2 US manufacturers when the govt puts tariffs on key inputs #tariffsaretaxes
“Auto sales hit record levels in 2016 & are slowing as automakers say they face challenges from both the slowing sales & tariffs on steel & aluminum.”November 26, 2018
“Until GM gets more flexibility in its platforms, it will continue to have to play whack-a-mole with its plants as the market transitions – and it will happen again,” said LMC analyst Bill Rinna. To look at the facts another way – The four GM car plants remaining open have a capacity to build 800,000 cars a year. But will only produce 360,000 cars this year, according to LMC.
In comparison, Detroit-based rivals Ford Motor Co. and Fiat Chrysler Automobiles will have one car plant each in North America after 2019. The Big Three automotive companies have seen the demand for traditional cars decline from 2014, when 48 percent of vehicles sold in the U.S. were cars, according to market researchers at J.D. Power and Associates. This year, sedans will account for less than a third of light-vehicle sales.
