United States President Donald Trump has wasted no time stirring the very still waters of the auto industry with a push for GM, Ford, and Fiat Chrysler to build more cars in the United States—and boost employment at home, too.
Ahead of a meeting this morning, Trump tweeted “I want new plants to be built here for cars sold here!” At said meeting, he later added, “We have a very big push on to have auto plants and other plants. It’s not the construction I want,” he said, “it’s the long term jobs that we’re looking for.”
The ambition is admirable, to say the least; and Fiat Chrysler CEO Sergio Marchionne agrees. He notes that his company has a “common goal” with this new administration:
“I appreciate the President’s focus on making the U.S. a great place to do business. We look forward to working with President Trump and members of Congress to strengthen American manufacturing.”
You may recall that Trump has long criticized automakers for building cars in Mexico (because it is cheaper to do so); and he has threatened the imposition of a 35 percent tariff on all imported vehicles.
As an example: The Toyota Camry remains one of the best selling cars in America (#1 in 2015) but approximately 25 percent of its parts come from Mexico, according to Toyota North America CEO Jim Lentz.
Furthermore, Mexico shipped more than $50 billion USD worth in cars to the United States, in 2015, and approximately the same amount in terms of auto parts. Accordingly, NAFTA rules stipulate that a vehicle can be sold in the United States, Canada, or Mexico—tariff-free–if 62.5 percent of that car’s components are from any country within the bloc.
This, of course, makes a great case for the whole of North America, but Trump wants to bring the jobs back to the US. Thus, he has openly discussed reexamining the NAFTA accord and even rewriting country of origin rules.
But, wouldn’t that also affect Canada?
Well, to that, Canada’s minister of the automotive industry has responded: “Canada and the U.S. have a highly integrated auto sector, one built on partnership. Our highly skilled workforce and innovative companies support and strengthen the competitiveness of production in the US, with parts and production flowing across our borders multiple times before completing a full vehicle. We are confident the new administration will see that Canada’s partnership with the U.S. strengthens our two nations and strengthens the competitiveness of the US auto sector.”