Trump claims car companies are 'pouring' into the US. The reality is a lot more troubling
- President Donald Trump again rails against General Motors, tweeting that the company’s job cuts and plant closures are an exception and “very counter to what other auto companies are doing.”
- But other automakers are also struggling. Ford said it will cut jobs and BMW’s exports have slumped.
- Rising material costs and export tariffs are hurting European and Japanese companies operating in the US as well.
US President Donald Trump renewed his attacks on GM Thursday morning, sending a tweet in which he described the firm as “very counter to what other auto … companies are doing.”
His tweet continued: “Big Steel is opening and renovating plants all over the country. Auto companies are pouring into the U.S., including BMW, which just announced a major new plant. The U.S.A. is booming!”
Not quite. Ford just last month announced that it would be forced to lay off employees as it cuts costs. While Trump could likely claim BMW building a new plant in the US as a big win, the German company has far from confirmed any plans, and has also shown signs that the trade war is actively hurting its business in the USA.
Honda, one of Japan’s largest automakers, has also felt the pain from Trump’s tariff agenda.
For Ford, some of the impetus for the layoffs is a restructuring program the company is undertaking, but the layoffs are also related to the president’s trade war, with the company citing recent sales woes in China and increased material costs as driving some of their pain.
Ford CEO Jim Hackett told an audience at a Bloomberg conference that the steel and aluminum tariffs imposed by the administration will cost the company $1 billion in 2018 and 2019.
Honda said it was in a similar boat. Rick Schostek, executive vice president for Honda North America, expressed concerns about the steel tariffs during a Senate Finance Committee hearing in late September.
“So, while we’re paying relatively little in the way of tariffs on steel, the price of domestic steel has increased as a result of the tariff, saddling us with hundreds of millions of dollars in new, unplanned cost,” Schostek said.
It’s a sensitive issue for Trump because the blue-collar workers in the Rust Belt make up a significant block of his base.
Since General Motors announced on Monday that it will cut 14,000 jobs and idle manufacturing plants in the Midwestern states of Ohio and Michigan, Trump has had the company squarely in his line of sight, firing off several tweets attacking the decision of GM and its CEO Mary Barra.
He also claims to have admonished Barra in person, and said he told the CEO that she had “better” reopen plants in the US soon.
“Auto companies are pouring into the U.S., including BMW, which just announced a major new plant.”
Even BMW’s new plant isn’t as rosy a picture as Trump is painting: BMW CEO Harald Krueger said on Tuesday that the German auto giant is considering building a second plant that would produce engines and transmissions.
“We’re at the range where you could think about a second location,” Krueger said, according to Reuters.
BMW’s US plant, located in Greer, South Carolina, produces the X3 and X5 models for the German firm. Both cars are hugely popular in China, but because of the retaliation of the Chinese government against US tariffs, are subject to tariffs of their own.
Auto exports from the Port of Charleston — where cars made at the Greer plant are shipped — dived roughly 35% in August compared to the same month in 2017, according to a report from the Charleston Post & Courier.
The situation could get worse
The threat of auto tariffs continues to loom large over the car manufacturing sector. Trump has threatened to impose 25% tariffs on all autos and auto parts coming into the US to extract concessions from trading partners including the European Union and Canada.
He is yet to follow through on such threats, but earlier this month it was reported that the White House was circulating a report discussing the prospect of auto tariffs.
Such tariffs, according to an analysis released by the Peterson Institute for International Economics in May, could see production fall by 1.5% and “cause 195,000 US workers to lose their jobs over a 1- to 3-year period or possibly longer.”
“The US auto and parts industries would shed 1.9% of their labor force,” the study added.
Correction: An earlier version of this story said Toyota suggested it could cut jobs in the US in response to President Donald Trump’s tariffs. The company has not revealed any plans to do so.
Read the full article from it’s original source: http://uk.businessinsider.com/trump-china-trade-war-tweet-about-general-motors-and-us-autos-2018-11