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Trump Attacks GM Over Mexican-Made Chevy Cruze

Detroit maker fires back at latest attack on auto imports.

by on Jan.03, 2017

The President-Elect shifts his focus to GM.

After spending much of his initial campaign taking shots at Ford Motor Co. for its plan to shift small car production to Mexico, President-Elect Donald Trump is now taking a poke at General Motors for importing the Chevrolet Cruze from a plant south of the border.

“Make in U.S.A. or pay big border tax,” the businessman-turned politician declared in a tweet, slamming GM for “sending Mexican-made model of Chevy Cruze to U.S. car dealers-tax free across border.” The president-elect has proposed dismantling or revising the North American Free Trade Agreement and hitting Mexican imports with as much as a 35% tariff – though he has notably made no public indication of plans to return production of his own clothing lines – some made in Mexico – back to the U.S.

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For its part, General Motors quickly responded to the Trump attack by noting that all of the Chevrolet Cruze sedans sold on the American market are produced in the U.S. A small number of Cruze hatchbacks recently began being imported from Mexico.

(China hits GM with fine seen as shot at Trump. Click Here for more.)

The decision to take on GM comes just weeks after Trump announced the maker’s CEO Mary Barra would serve as an advisor to the incoming president on economic policy.

All Chevy Cruze sedans sold in the U.S. are actually assembled in Ohio.

Until now, the country’s largest automaker had largely been exempt from the president-elect’s aggressive moves targeting Mexican imports – as has Fiat Chrysler Automobiles. All three of the Detroit-based carmakers produce vehicles in Mexico, some being shipped to the U.S., others going to various markets in Latin America and other parts of the world.

Ford took heat because it announced it would move all small car production to Mexico. But the maker also noted that it would replace slow-selling models like the Ford Focus with high-demand trucks like the new Ford Bronco it is expected to soon start building at its plant in the Detroit suburb of Wayne, Michigan.

For his part, Ford CEO Mark Fields warned that a 35% tariff on Mexican-made goods, including cars, would have a “huge impact” on the American economy, during a speech at the Los Angeles Auto Show in November. The chief executive and other Ford officials have since tried to ease relations with the next president, though they have not backed down from their shifting production plans.

(For more on Fields’ comments on the Trump import plan, Click Here.)

Nor does it appear GM will rethink its strategy for the compact Chevy Cruze.

“General Motors manufacturers the Chevrolet Cruze sedan in Lordstown, Ohio,” the maker said in a statement. “All Chevrolet Cruze sedans sold in the U.S. are built in GM’s assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S.”

Hatchbacks haven’t been popular in the U.S. market in recent decades and the move to introduce the Cruze five-door has been seen as a test to see if the market is beginning to shift. Analysts say that were GM to have to retool an American plant to add the Cruze hatchback it would more likely drop the model entirely.

Indeed, automakers routinely defend their import strategies, noting that they need to carefully balance manufacturing footprints to reflect globally demand and manufacturing logistics.

A small number of Cruze Hatchbacks are being imported from a GM plant in Mexico.

That said, the auto industry, on the whole, manufactures far more of the products its sell in the U.S. in American plants than virtually any other industry. By contrast, the garment industry, which includes various products sold under the Trump label, is among the most import-oriented. The president-elect has so far ignored calls to bring back his own clothing lines which are manufactured in, among other places, Mexico and China.

The latest Trump tweet does have its supporters, including the United Auto Workers Union. Though the labor group strongly favored Democratic candidate Hillary Clinton during the recent campaign, it has expressed a willingness to back the president-elect in reframing or eliminating NAFTA.

“I’m prepared to sit down and talk to him about trade. NAFTA is a problem,” UAW President Dennis Williams told reporters after the November election. “I think his position on trade is right on.”

The Ohio plant that produces the Chevy Cruze is expected to drop its third shift – a move eliminating 1,200 jobs, on January 23rd. That reflects a general weakening in demand for passenger cars, especially smaller models, as Americans shift to SUVs and other light trucks. The anticipated volume for the imported Cruze hatchback would not be enough, analysts have said, to justify retaining that shift.

(Sales slowing, automakers accelerate plant closings, job cuts. Click Here for more.)

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