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Industryweek 30828 Gm Flint
Industryweek 30828 Gm Flint
Industryweek 30828 Gm Flint
Industryweek 30828 Gm Flint

GM Warns Tariffs Could Lead the Carmaker to Shrink in the US

June 29, 2018
“Increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less -- not more -- U.S. jobs,” the nation’s largest automaker said.

General Motors Co. issued a stern warning to the Trump administration that it could shrink U.S. operations and cut jobs if tariffs are broadly applied to imported vehicles and auto parts.

“Increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less -- not more -- U.S. jobs,” the nation’s largest automaker said in comments submitted on June 29 to the Commerce Department.

President Donald Trump ordered an investigation of whether auto imports pose national security risks last month under a section of the same 1960s trade law used to impose levies on steel and aluminum. The administration is said to be considering auto tariffs of as much as 25%.

The probe has raised alarm among manufacturers, parts suppliers and auto retailers because all major carmakers -- including GM and Ford Motor Co. -- import a substantial share of the vehicles they sell in the U.S. from other countries. Levies on parts also would have major implications for top models like the Ford F-150 pickup and Toyota Camry sedan by boosting prices by thousands of dollars.

The White House didn’t immediately comment on GM’s remarks.

Additional tariffs -- on top of those recently slapped on steel, aluminum and Chinese products -- could hurt GM and ultimately its customers, the Detroit-based maker of Chevrolet, Cadillac, Buick and GMC vehicles said. Higher prices would crimp sales, particularly to less-affluent consumers, and reduce the number of factory workers needed.

If GM were to try to absorb the additional costs, it would have less money to invest in popular vehicles that sustain manufacturing jobs, or toward pivotal technologies including electric and self-driving cars.

“The threat of steep tariffs on vehicle and auto component imports risks undermining GM’s competitiveness against foreign auto producers by erecting broad brush trade barriers that increase our global costs, remove a key means of competing with manufacturers in lower-wage countries, and promote a trade environment in which we could be retaliated against in other markets,” the company said.

GM’s Chevrolet Silverado pickup was the top-selling model imported from Mexico last year, while the Chevrolet Equinox crossover was the leading vehicle sourced from Canada, according to LMC Automotive.

“GM imports a lot of pickup trucks from Mexico, so it’s a huge issue,” Alan Baum, an auto analyst in West Bloomfield, Mich., said. “And for parts, it’s not just GM. Everyone imports a lot of electronics from Asia. Those are high-value parts.”

By David Welch

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