GM warns against potential vehicle tariffs

Daniel Fowler
June 30, 2018

General Motors may have to slash its American workforce to compete in Europe as a result of Trump's tariffs, the New York Times reports. The president has cited national security concerns as the reason for slapping tariffs on imported steel and aluminum, drawing retaliatory tariffs from the European Union, Mexico, Canada, Turkey and India.

General Motors Co warned on Friday that higher tariffs on imported vehicles under consideration by the Trump administration could cost jobs and lead to a "a smaller GM" while isolating USA businesses from the global market.

"The penalties we could incur from tariffs and increased costs will be detrimental to the future industrial strength and readiness of manufacturing operations in the United States, and could lead to negative consequences for our company and USA economic security". GM said it employs about 110,000 workers in the US and has invested more than $22 billion across 47 manufacturing facilities since it emerged from its government-led bankruptcy in 2009.

Its comments echoed those from two major USA auto trade groups on Wednesday, when they warned that tariffs of up to 25 percent on imported vehicles would cost hundreds of thousands of auto jobs, dramatically raise prices on vehicles and threaten industry spending on self-driving cars. "A 25 percent tariff on automotive imports, which is just a tax on consumers, would increase the cost of every vehicle sold in the country".

"At some point, this tariff impact will be felt by customers", GM said.

Business groups sent in comments this week to the Commerce Department, which is investigating whether Section 232 tariffs should apply to imports of automobiles and auto parts in the interest of national security.

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They could however be exempted from service should South Korea win the Asian Games later this summer. Hummels said the warning signs had been there after Germany lost its opening game 1-0 to Mexico .

Still, 30 percent of the vehicles GM sold on the US market in 2017 were manufactured overseas, according to the Michigan-based Center for Automotive Research.

General Motors Co. delivered a harsh warning to the Trump administration, saying that a 25 percent tariff would likely lead them to reduce USA operations and cut jobs.

Trump argued that his administration was imposing the tariffs in the interest of USA national security, citing rarely used Section 232 laws.

Both GM and Toyota warned that US consumers would bear the brunt of increased costs.

"In its filing on Friday, The National Association of Manufacturers (NAM) said Trump's tariffs stand to undermine the sector, ultimately "[giving] an edge to foreign production at the expense of USA manufacturing, job growth, our economy and ultimately US national security".

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