GM blasts Trump tariffs
Automaker warns that higher prices, job cuts are likely
General Motors came out swinging Friday against President Donald Trump’s proposed tariffs on foreign automobiles, saying they risked weakening the company’s global competitiveness and would lead to job cuts at home and abroad.
In comments filed with the Commerce Department, which is evaluating whether auto imports threaten U.S. national security as the president has suggested, GM said the new tariffs would hurt the economy.
Trump’s proposal “risks undermining GM’s competitiveness against foreign auto producers by erecting broad brush trade barriers that increase our global costs” and could invite retaliation by U.S. trading partners, the automaker said.
The company’s blunt statement underscores the increasing frustration among American multinational corporations that fear the president’s “America First” trade policy ignores the realities of a global economy.
“The overbroad and steep application of import tariffs on our trading partners risks isolating U.S. businesses like GM from the global market that helps to preserve and grow our strength here at home,” the company said.
Consumers “at some point” will feel the impact of Trump’s tariffs in higher
prices for passenger cars and auto parts. The per-vehicle increase of several thousand dollars will hit “customers who can least afford” the higher costs, the company warned.
If the company instead absorbed the tariff, it would reduce hiring, investment and wages, according to the filing. GM has 47 manufacturing sites and 25 service-part facilities in the U.S., where it employs around 110,000 people. Since the 2009 depths of the Great Recession, the company has invested more than $22 billion in its American factories, it said.
Instead of additional tariffs, the administration should concentrate on reaching agreements with Mexico and Canada on a modernized North American trade deal, GM said. Those negotiations, which began in August, have stalled.
GM said Trump’s earlier decisions to levy import taxes on steel, aluminum and billions of dollars in Chinese goods also was damaging its prospects. The president’s interest in taxing foreign cars, perhaps to encourage the European Union or Japan to open their markets further to American exports, sparked quick opposition from prominent Republicans.
‘Deeply misguided’
Sen. Orrin Hatch, the chairman of the Senate Finance Committee, called Trump’s push for auto tariffs “deeply misguided.”
The president, however, has complained about the EU’s 10 percent tariff on American cars. The U.S. currently imposes a 2.5 percent tax on cars imported from Europe and elsewhere.
“They send Mercedes, they send BMWs, they send everything; we tax them practically nothing,” Trump said this week at a rally in South Carolina.
The Commerce Department already has received more than 2,100 comments from businesses, trade groups and individuals in response to the tariffs. Two days of public hearings are scheduled July 19-20, and the president could go ahead with his additional tariffs shortly thereafter.
The Motor & Equipment Manufacturers Association, representing 1,000 vehicle parts-makers, told Commerce it “strongly opposes” Trump’s tariffs. “Counterproductive unilateral actions will place manufacturers at a competitive disadvantage to their global counterparts, erode U.S. jobs and growth, and will not protect the national security of the United States,” the industry group said.
Trudeau responds
Meanwhile, Canadian Prime Minister Justin Trudeau’s government finalized retaliatory tariffs on $12.6 billion of American goods and pledged money to support companies and workers hurt by U.S. levies on Canadian steel and aluminum exports.
The tariffs mirror the value of those imposed by the Trump administration. Canada will apply a 25 percent tariff on steel products and 10 percent on aluminum and consumer goods. The levies will remain in effect until the U.S. eliminates its tariffs on Canadian steel and aluminum.
Japan didn’t explicitly threaten retaliation but said “rebalancing measures” by other countries “might well result in damage to the U.S. manufacturing and agricultural industries.”
In its comment, Japan stressed its automakers’ contributions to the U.S. economy. It noted that Japanese automakers produce “as many as 3.8 million cars” in the U.S., many of which are subsequently exported. Any U.S. trade restrictions “could seriously affect more than 1.5 million jobs created by Japanese auto-related companies in the U.S.,” it said.
A 25 percent tariff on Japanese autos and parts would amount to a levy of about $9.1 billion annually, according to Bloomberg Economics’ Yuki Masujima. If Japanese auto exports dropped by about 600,000 vehicles, that would lower economic growth by 0.3 percentage point, according calculations by Nomura Securities.