US Tariffs on More Foreign Vehicles Would Have Prevented GM Plant Closures

Posted December 01, 2018

American International Automobile Dealers Association CEO Cody Lusk and Wall Street Journal automotive reporter Tim Higgins on how President Trump is threatening to impose tariffs on imported cars after General Motors announced job cuts and plant closures.

And it said "many" of the workers impacted by the plant closures "will have the opportunity to shift to other GM plants", where it produces popular and top-selling trucks and SUVs.

GM shut down its Australian manufacturing arm in October 2017, closing its Adelaide plant and placing 944 people out of work. "So I don't know exactly how they would do that".

USA auto sales are down 0.2 percent through October largely because of a 13 percent plunge in vehicle sales. Shares fell as much as 3.8 percent, wiping out much of its gain a day earlier.

Trump, meanwhile, who has had a strained relationship with Justin Trudeau, found common ground with the Canadian prime minister Tuesday when they discussed GM's plans to stop production of six vehicle models, leaving the future of five plants and some 14,000 employees in doubt. US consumers have responded by purchasing yet more SUVs and trucks, which accounted for about 65 percent of new-vehicle sales in September.

"Look, we made this deal, we've worked with you along the way, we've done other things with mileage standards, for example, and other related regulations", Kudlow said.

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White House press secretary Sarah Huckabee Sanders said she did not have any additional information on the President's threat. But a change in the tax break would require action by Congress. They could go out to dinner or the movies.

"GM was the first in the market alongside Tesla, and eliminating the EV tax incentive all together would level the playing field as the competition has only started to heat up the segment", he said.

Tesla Inc. has already reached the cap and GM is expected to be next. By nearly any measure, U.S.jobs, unemployment, personal income are at their best levels ever.

After the President's comments, the GM share fell by 3.8 per cent and closed down 2.6 per cent, wiping out much of the gains of Monday when it soared after the company announced its restructuring plans that involved closure of five plants in the USA and Canada and slashing of over 14,000 jobs.

But that argument all but evaporated Monday when the company announced that as part of its plan to save US$6 billion by the year 2020, it was also shutting down production at four other USA plants - several of them deep in Rust Belt states that helped elevate Trump to the presidency in 2016. The company has also promised to add technical and engineering personnel to support the development of electric and autonomous vehicles.

"The U.S. saved General Motors, and this is the THANKS we get!" the president tweeted on Tuesday. Dean Heller, R-Nev., where Tesla operates a large battery factory. Heller, a Republican, lost his re-election bid this month to Democrat Jacky Rosen.

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"There's a beacon of hope", said UAW Local 1112 President Dave Green.

But the president seemingly hasn't done the math on how cutting subsidies would actually affect GM.

Federal cash helped other vehicle and parts makers to make more than $4-billion of investments in Canada since 2015, including significant expansions by Ford, Honda and Toyota, the minister said.

The U.S. government closed the 2018 fiscal year $779 billion in the red, its highest deficit in six years, according to the latest Treasury Department financial statements.

Japanese-made passenger vehicles imported to the USA totaled an estimated $40 billion in 2017 and German-made cars totaled $20 billion in the same year.

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