General Motors Co warned that higher tariffs on imported vehicles under consideration by the Trump administration could cost jobs and lead to a "a smaller GM" while isolating US businesses from the global market. The administration in May launched an investigation into whether imported vehicles pose a national security threat, and US President Donald Trump has repeatedly threatened to impose a 20 percent vehicle import tariff. The largest US automaker said in comments filed with the US Commerce Department that overly broad tariffs could "lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and riskless — not more — US jobs." Higher tariffs could also hike vehicle prices and reduce sales, GM said.
Its comments echoed those from two major US auto trade groups, 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. Even if automakers opted not to pass on higher costs "this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies," GM said.
GM operates 47 US manufacturing facilities and employs about 110,000 people in the United States. It buys tens of billions of dollars’ worth of parts from US suppliers every year, and has invested over $22 billion in US manufacturing operations since 2009. Still, 30 percent of the vehicles GM sold on the US market in 2017 were manufactured abroad, according to the Michigan-based Centre for Automotive Research. Eighty-six percent of those vehicles came from Canada and Mexico, while others came from Europe and China. Detroit automakers Ford Motor Co and Fiat-Chrysler Automobiles NV also import many of the vehicles they sell in the United States.
"The overbroad and steep application of import tariffs on our trading partners’ risks isolating US businesses like GM from the global market that helps to preserve and grow our strength here at home," GM said. Some aides have said that Trump is pursuing the national security probe to put pressure on Canada and Mexico to agree to concessions in talks to renegotiate the North American Free Trade Agreement.
Toyota Motor Corp filed separate comments opposing the tariffs saying they would "threaten US manufacturing, jobs, exports, and economic prosperity." The company noted that Trump has repeatedly praised the Japanese automaker for investing in the United States, including a new $1.3 billion joint venture assembly plant in Alabama with Mazda. "These investments reflect our confidence in the US economy and in the power of the administration’s tax cuts," Toyota said.
Toyota noted that international automakers assembling vehicles in the United States are based in countries including Japan, German and South Korea "that are America’s closest allies." The Commerce Department plans two days of public hearings next month and Commerce Secretary Wilbur Ross said last week he aimed to wrap up the probe into whether imported vehicles represent a national security threat by late July or August.
“We have received approximately 2,500 comments already," Ross said in a statement on Friday, adding that he expected more before a midnight deadline.
"The purpose of the comment period and of the public hearing scheduled for July 19th and 20th is to make sure that all stakeholders’ views are heard, both pro and con. That will enable us to make our best-informed recommendation to the President,” the statement said.