Trump scraps push for 54.5 miles per gallon
US PRESIDENT Trump came to the heart of the auto industry on Wednesday with a manifesto for American manufacturing: to remove the shackles of regulation and restore an age of industrial glory.
Granting the automakers their top wish, Trump halted an initiative by the Obama administration to impose stringent fuel-economy standards by 2025 – rules meant to cut carbon emissions and meet international commitments to address climate change.
“The assault on the American auto industry is over,” he said.
The move to reopen the government’s review of the standards will allow automakers to argue for less-stringent and less-costly – mileage standards than the target of 54.5 miles per gallon set in 2012.
But the Trump administra- tion is expecting things from the automakers in return: new American jobs, and less investment in foreign operations.
And while he vowed to improve business conditions at home, Trump pledged again to stop the flow of automotive investment and jobs to Mexico under the North American Free Trade Agreement, which he termed “a total disaster”.
“We want to be the car capital of the world again,” the president said. “And we will be.”
The announcement was delivered before hundreds of auto executives and workers in a former assembly plant near Detroit. It drew sharp criticism from environmental groups contending that laxer regulations would increase global warming and hurt consumers.
But Trump preferred to focus on his economic doctrine, which he termed “the American model” for stimulating growth and business expansion.
“Under this system, we will reduce burdens on our companies and on our businesses,” Trump said. “But, in exchange, companies must hire and grow in America.”
His policies will get an early test with an industry that was brought to its knees by the recession eight years ago and required an $80 billion taxpayer bailout. But the industry is coming off two straight years of record sales in the US, and carmakers are flush with profits.
By acceding to the industry’s plea for regulatory relief, Trump is challenging them to funnel more resources into their US manufacturing operations.
One auto industry analyst said the decision to reopen fueleconomy negotiations appears to have been brokered during meetings between the president and the chief executives of the three big US automakers – GM, Ford Motor and Fiat Chrysler – shortly after he took office.
“We believe an ‘art of the deal’ may have been struck trading jobs for regulatory relief,” the analyst, Brian Johnson of Barclays, wrote in a letter to investors on Wednesday.
Detroit auto executives have been tight-lipped about their give-and-take with the White House. All three companies have, however, already made promises to add or retain thousands of US jobs.
And just hours before Trump’s speech on Wednesday, GM said it would create 220 additional jobs in a Michigan transmission plant and retain 680 workers at another factory who were facing layoffs.
Without mentioning the president’s decision on fuel standards, GM’s chief executive, Mary T Barra, said the new and preserved jobs underscored the “overall positive outlook for the auto industry and the US economy”.
Trump called GM’s move “just the beginning” of a new era of job growth in the industry.
“That’s peanuts,” he said. “We’re going to have a lot more. They’re going to be building new plants, expanding their plants.”
But automakers may be hardpressed to meet expectations.
The financial collapse of the industry is still a fresh memory, and companies have streamlined their manufacturing operations to eliminate costly excess capacity. Adding plants in a market at its peak could upset the industry’s steady recovery and jeopardise the big profits earned in recent years on larger vehicles like pickups and SUVs.