Trump pressures Ford, GM not to make cars in Mexico
On the campaign trail, Trump attacked Ford continuously for its plan to build a plant in Mexico to produce the Focus. Last fall, he said he would add a 35 percent tariff to cars made in Mexico and sold in the United States. This week, Ford canceled the plant and said it would invest $700 million in its plant in Flat Rock, Mich., to build a future autonomous hybrid and an electric SUV. The move will create 700 new U.S. jobs.
Ford will move production of the Focus to its existing plant in Hermasillo, Mexico. Like the Republicans in Congress who decided not to gut the Office of Congressional Ethics after all, Ford did not want to credit Trump for the reversal.
Ford CEO Mark Fields said that with U.S. buyer demand for small cars like the Focus plummeting, it doesnêt make sense to build a new plant to make more of the model. But Fields did say he was encouraged by anticipated pro-growth policies from the president-elect and what he expected would be a more business-friendly atmosphere, with tax cuts likely.
General Motors was the target of a Trump tweet that threatened a big border tax on the automaker for building the Chevrolet Cruze at a Mexican plant. But GM stood firm, pointing out that the Cruze sedans sold in the United States are made in Lordstown, OH, and the hatchbacks made in Mexico are for global markets only. In the United States, sales of the compact Cruze are suffering the same fate as the Focus. Nobody wants small cars when gas is so cheap.
Still, as Detroit News columnist Daniel Howes points out, Trumpês Build in America campaign is not so easily applied to the auto industry. It just doesnêt make economic sense for U.S. automakers to build compact cars in the United States, with its high labor costs, when few small cars are sold here. Trump threatens to skew the market by slapping a 35 percent tariff on cars imported to the U.S. But itês not clear that a Republican Congress would go along with what some members would surely see as an anti-business, anti-free trade move.Download Bulletin PDF