Trump Tweets tax threats to General Motors
by Tom Krisher, The Associated Press
President-elect Trump has again taken to Twitter to threaten a domestic U.S. automaker over its legal Mexico operations
GM produces the Chevrolet Cruze at its plant in Lordstown, Ohio. PHOTO GM
DETROIT—In another tweet targeting a U.S. company, President-elect Donald Trump is threatening to slap a tax on General Motors for importing compact cars to the U.S. from Mexico.
But GM makes the vast majority of compact Chevrolet Cruzes at a sprawling complex in Lordstown, Ohio, east of Cleveland.
Trump tweeted early Tuesday that GM is sending Mexican-made Cruzes to the U.S. tax-free. He told GM to make the cars in the U.S. “or pay big border tax!”
GM imports only hatchback versions of the Cruze from a factory in Ramos Arizpe, Mexico, and it sold only about 4,500 of them in the U.S. last year, spokesman Patrick Morrissey said. The company sold about 172,000 Cruzes through November. The hatchback, which went on sale in the U.S. in the fall, is built in Mexico for global distribution, Morrissey said.
Related: Ford cancels $1.6B Mexico small car plant, redirects investment to U.S.
GM shares fell by about 1 per cent in premarket trading immediately after the tweet, but bounced into positive territory after the market opened Tuesday.
Cruze hatchback production amounts to less than a day of output at the Lordstown plant, said Glenn Johnson, president of a United Auto Workers union local at the factory. The union, he said, is not protesting the move to build the hatch in Mexico.
“It makes for news, that’s all,” Johnson said of Trump’s tweet. The Lordstown factory, he said, is not equipped to build the hatch.
GM did import some Cruze sedans from Mexico last year to meet demand as it was rolling out a new version of the compact car, Morrissey said, but that has stopped and all sedans sold in the U.S. are now made in Ohio, he said.
The tweet was the latest threat from Trump to tax companies that move production to Mexico and ship products back to the U.S. under the North American Free Trade Agreement. Last year Trump went after Ford for plans to shift production of the compact Focus to Mexico. Jobs at the Detroit-area factory that now makes Focuses would be preserved because the plant is to get a new small pickup truck and SUV. Ford’s CEO says the company will not change the plans.
Trump’s targets have ranged from U.S. retailers and defence contractors, to tech companies. Amazon.com, Boeing and Macy’s have been the subject of Trump tweets in the past, while Twitter criticism of Lockheed Martin last month temporarily wiped out $4 billion of the company’s market value.
Last year Trump touted a deal to keep 800 jobs at the Carrier furnace factory in Indianapolis from going to Mexico. He has promised to lower corporate tax rates to preserve factory jobs inside the United States, while threatening harsh penalties for companies that produce goods overseas to save on labour costs. On Twitter, Trump warned that he will impose a 35 per cent tariff on the goods imported by companies that outsource production.
In November, GM said it would lay off about 1,250 workers at the Lordstown plant due to sagging demand for cars as U.S. buyers take advantage of low gasoline prices to buy trucks and SUVs. The workers on the third shift at Lordstown will go in indefinite layoff starting Jan. 23, although some may move to other GM factories.
Sales of the Cruze were down more than 18 per cent through November.
Shifting demand from cars to trucks and SUVS is forcing General Motors to lay off more than 2,000 workers. Last month, 61.5 per cent of U.S. new vehicle sales were trucks and SUVs, according to Autodata Corp., and analysts say there’s no sign that will change anytime soon.
