U.S. President-elect Donald Trump on Tuesday criticized General Motors, the country's biggest automaker, for sending its Mexican-made Chevrolet Cruze compact models back to U.S. car dealers tax free and threatened to impose a hefty tariff on the company.
"Make in U.S.A. or pay big border tax!" Trump declared in a Twitter message.
GM said it already makes the majority of its compact Cruze models in the United States, at its Lordstown, Ohio, manufacturing plant in the country's industrial heartland. GM said it imports only the hatchback version of the Cruze from Mexico, a small percentage of the 172,000 Cruzes the automaker sold through the first 11 months of last year. In addition to Mexico, GM makes the $21,000 car in China.
The automaker said last June that consumer demand for the Cruze was such that the Lordstown plant couldn't produce enough of them, leading the company to ramp up production at its existing manufacturing facility in Ramos Arizpe, Mexico.
General Motors has sold more than 3 million of the vehicles since it started the line of Cruze models in 2009, with nearly half of the sales in China, followed by purchases in the U.S., Russia and Brazil.
Like other U.S. manufacturers, General Motors employs cheaper labor in Mexico, paying workers an average of about $10 an hour, substantially less than the $33 average for autoworkers in the U.S. and benefits from Mexico's free trade agreements with 40 countries, including the United States.
Blasting current trade deals
The Republican Trump, during his lengthy presidential campaign, assailed U.S. trade deals, including the 1994 North American Free Trade Agreement with Mexico and Canada, contending the pacts lead to the elimination of jobs for U.S. workers. He has vowed to renegotiate NAFTA and pull the U.S. out of a proposed deal among 12 Pacific Rim nations, but Trump faces opposition in Washington from Republican lawmakers who often favor the free trade agreements.
Trump has vowed to impose a 35 percent tax on U.S. companies that make their products in other countries if they try to send them back across the border for sale in the U.S. Trump, however, would need congressional approval to impose such a tax and risks initiating a trade war with other countries and forcing U.S. consumers to pay higher prices on foreign-made goods.
The president-elect's broadside against GM, the world's third biggest automaker behind industry leading Toyota Motor of Japan and Volkswagen of Germany, is his latest attack on an array of individual American companies as he gets set to assume power at his January 20 inauguration. He previously assailed carmaker Ford, aircraft maker Boeing, giant internet sales company Amazon and the Macy's department store.
Ford on Tuesday canceled its plan to build a $1.6-billion manufacturing plant in Mexico. Instead, the No. 2 U.S. automaker said it would add 700 jobs in the U.S. and invest $700 million at an existing assembly plant in Michigan to build self-driving and electric vehicles.
Trump's criticism of GM came as he named attorney Robert Lighthizer, an experienced trade official who has questioned conservatives' support for free trade, to be the U.S. trade representative.
"Ambassador Lighthizer is going to do an outstanding job representing the United States as we fight for good trade deals that put the American worker first,'' Trump said. "He will do an amazing job helping turn around the failed trade policies which have robbed so many Americans of prosperity."