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. While Ford was previously Trump's main and sometimes undeserving target when it came to Mexican manufacturing, Trump's focus is now on the Chevy Cruze. His tweet threatens GM with a tax on imported Cruze models from Mexico.
Not all Cruzes are built in Mexico, though. GM put out a three-sentence press release in response to the tweet explaining where its Cruze models are built. While the Cruze hatchback is built in Mexico for both US and global markets, every single sedan sold in the US is built in Lordstown, Ohio.
Trump didn't specify how large his hypothetical tax would be in his tweet. In the past, when criticizing Ford for Mexican production, he had proposed a 35-percent tariff.
President-elect Donald Trump took aim at General Motors today on Twitter. While Ford was previously Trump's main and sometimes undeserving target when it came to Mexican manufacturing, Trump's focus is now on the Chevy Cruze. His tweet threatens GM with a tax on imported Cruze models from Mexico.
Not all Cruzes are built in Mexico, though. GM put out a three-sentence press release in response to the tweet explaining where its Cruze models are built. While the Cruze hatchback is built in Mexico for both US and global markets, every single sedan sold in the US is built in Lordstown, Ohio.
Trump didn't specify how large his hypothetical tax would be in his tweet. In the past, when criticizing Ford for Mexican production, he had proposed a 35-percent tariff.
I fully support Trump's threat to slap a 35% tariff (if that's the figure he chooses) on Mexican-built Cruzes, although I don't think it will actually make much difference on what is actually sold here in the U.S. That's because all of the sedan versions of the Cruze sold here are also built here...at Lordstown, OH. GM does offer the Mexican-built Cruze hatchback here as of 2017, but IMO it is likely to have few buyers, even if the tariff forces the selling price up (which it is likely to do). That's because Americans traditionally aren't big fans of sedan-based hatchbacks. Chevy tried selling the Malibu Maxx 5-door hatchback some years ago, and it was also a sales flop.
I fully support Trump's threat to slap a 35% tariff (if that's the figure he chooses) on Mexican-built Cruzes, although I don't think it will actually make much difference on what is actually sold here in the U.S. That's because all of the sedan versions of the Cruze sold here are also built here...at Lordstown, OH. GM does offer the Mexican-built Cruze hatchback here as of 2017, but IMO it is likely to have few buyers, even if the tariff forces the selling price up (which it is likely to do). That's because Americans traditionally aren't big fans of sedan-based hatchbacks. Chevy tried selling the Malibu Maxx 5-door hatchback some years ago, and it was also a sales flop.
Any tariff on cars "imported" from Mexico is likely considered to be illegal in accordance with the North American Free Trade Agreement (NAFTA). President Trump, with cooperation from Congress will be able to renegotiate NAFTA but likely cannot unilaterally set tariffs, despite how popular it may be. Regardless -- tariffs or renegotiation -- be prepared for a big fight from corporations in the USA, and Mexico and Canada that would be affected. If this results in court fights, there are no guarantees that the Trump government will win.
Any tariff on cars "imported" from Mexico is likely considered to be illegal in accordance with the North American Free Trade Agreement (NAFTA). President Trump, with cooperation from Congress will be able to renegotiate NAFTA but likely cannot unilaterally set tariffs, despite how popular it may be. Regardless -- tariffs or renegotiation -- be prepared for a big fight from corporations in the USA, and Mexico and Canada that would be affected. If this results in court fights, there are no guarantees that the Trump government will win.
Any tariff on cars "imported" from Mexico is likely considered to be illegal in accordance with the North American Free Trade Agreement (NAFTA).
That depends on the details of the agreement...and exactly how one defines "free trade". A tariff does not prevent trade......it simply taxes it.
And the NAFTA agreement, BTW, is something that Trump, like Ross Perot, was strongly opposed to, right from the start.
If this results in court fights, there are no guarantees that the Trump government will win.
That may partially depend on how many vacancies we see in the Federal Courts. Trump will be appointing all of the Federal Justices, once he takes office. He will, of course, probably pick people who agree with his views.
The only American car in this list is the Camaro. But note that the 5th-generation Camaro was built in Oshawa, Ontario, Canada.
Also, although that article is dated November 2016, it is unclear whether these are all cars that Trump presently owns, or simply a cross-section of what he has owned in the past vs. the present. That photo of him with the old Rolls-Royce is obviously decades old....he looks far younger in that picture.
I suspect that, as President, if he doesn't already, he will own and operate a fleet of cars in line with his campaign promises.
That depends on the details of the agreement...and exactly how one defines "free trade". A tariff does not prevent trade......it simply taxes it.
The purpose of these trade agreements was to (greatly) reduce -- if not eliminate -- tariffs.
Originally Posted by mmarshall
And the NAFTA agreement, BTW, is something that Trump, like Ross Perot, was strongly opposed to, right from the start.
That does not matter. The president cannot unilaterally "tear up" a legal entity like a trade agreement; and the trade agreement, being enacted by Congress will require the help of Congress to renegotiate. Granted, the Republicans do now control the White House, the Senate and the House; but trade agreements are not unilateral declarations, but involve other parties. NAFTA would have to be renegotiated with both Canada and Mexico, and -- unofficially but still importantly -- corporations in all 3 countries.
It is not a simple matter.
Originally Posted by mmarshall
That may partially depend on how many vacancies we see in the Federal Courts. Trump will be appointing all of the Federal Justices, once he takes office. He will, of course, probably pick people who agree with his views.
If it comes up before the courts, it may be a Mexican court or a Canadian court; and can you guarantee that all American federal justices will side with the American federal government?
The purpose of these trade agreements was to (greatly) reduce -- if not eliminate -- tariffs.
That's just the point. Trump seems to believe in tariffs when he deems them necessary to level the playing field. He feels (and, to an extent, but not totally, I agree with him) that the UAW and other auto workers have suffered unnecessary, due to the excessive relocation of jobs overseas. Looking at the overall picture, I think he has a point, and apparently, so do millions of people in the Rust Belt that helped elect him.
That does not matter. The president cannot unilaterally "tear up" a legal entity like a trade agreement; and the trade agreement, being enacted by Congress will require the help of Congress to renegotiate. Granted, the Republicans do now control the White House, the Senate and the House; but trade agreements are not unilateral declarations, but involve other parties. NAFTA would have to be renegotiated with both Canada and Mexico, and -- unofficially but still importantly -- corporations in all 3 countries.
It is not a simple matter.
We'll see. Obama, in the last couple of years, issued a lot of Executive Orders of questionable authority or Constitutionality...and many of them stuck. It remains to been seen how Trump (and/or Congress) will handle it.
As someone who works in international corporate tax in my professional life, I can certainly echo the comments above that unraveling agreements such as NAFTA (and of course the parallel issue that will happen with with the BREXIT unraveling) will be incredibly complex and will come with consequences that go beyond the industry which is the subject of the thread. NAFTA of course facilitates the movement of goods and trade between the signatories, largely without tariffs, and there are of course many other industries other than the auto industry which buy and sell product and materials from and to Canada and Mexico. Industries/US business which are net exporters get significant benefit from these agreements. Without getting into the political realm, I will simply say that highly impactful policy matters such as these must be based on more than tweets and soundbites, and that cherry-picked (and, in this case, misrepresented) examples from one industry should not be the basis for what would be wide-ranging policy changes that could adversely impact many others.
This issue, though, in fact, does go beyond simple tweets. Trump has long-felt (way before the time he started tweeting) that too many jobs have been exported, that there wasn't a level playing field for the American worker in many industries, and particularly the auto industry. Since the election, though, unlike the past, he's now in a position to actually do something about it. You've seen the start (Carrier and Ford).........with the promise of a lot more to come.
01-03-17, 08:22 AM
Trump threatens GM with tax on Mexican-built Cruze models
