Trump’s stance on trade ‘big issue’ for automakers

U.S. president-elect Donald Trump’s critical stance toward free trade could affect Fiat Chrysler’s business in North America, according to the Italian automaker’s chief executive Sergio Marchionne.

Trump’s election “certainly is a game-changer, mainly because I think there are a number of conditions in the U.S. which are not yet spelled out,” Marchionne told Bloomberg Television.

Statements Trump has made about trade are “a big issue” because of the North American Free Trade Agreement’s impact on Fiat’s operations in the U.S., Mexico and Canada. Trump frequently slammed NAFTA during his campaign, blaming it for U.S. job losses.

The president-elect has singled out Ford Motor Co. for making cars in Mexico and has called for imposing a 35-per-cent tariff on products made by companies that move their production from the U.S. to other countries.

Since 2010, nine global automakers, including GM, Ford and Fiat, have announced more than US$24 billion in Mexican investments.

Fiat, which generates the lion’s share of its profits in North America, assembled about 17 per cent of all the vehicles it made in that region in Mexico in the first 10 months, according to Kevin Tynan, Bloomberg Industry senior analyst. Almost all of those cars were sold in the U.S. and Canada.

“The company would incur hefty costs if the Trump administration is able to enact a 35-per-cent levy on vehicles and parts imported into the U.S.,” Tynan said.

Marchionne warned in June that a Trump victory could impact the carmaker’s production options in North America, depending on whether he supports protectionist views. The Fiat CEO said he hasn’t spoken with Trump but will work with the new administration.

Fiat shares have gained 14 per cent since the Nov. 8 vote, with a jump three days later after Trump chose a prominent climate change skeptic to lead his Environmental Protection Agency transition team.

That fuelled speculation that the new administration may loosen fuel-economy rules, which would benefit makers of conventional engines.

EDUARDO VERDUGO/THE ASSOCIATED PRESS FILES Donald Trump has called for instituting a 35-per-cent tariff on products made by companies that move their production from the U.S. to other countries.