USA First Look

Trump challenges GM on cars made in Mexico (+video)

Trump tweeted that the carmaker must either build its cars in the US or 'pay a big border tax.'

A Cruze car is shown at a Chevrolet event in Guangzhou, China in November 2016.
Bobby Yip/Reuters/File
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Threatening once again to impose a hefty tariff on foreign-made goods, US President-elect Donald Trump singled out yet another manufacturing company Tuesday via Twitter, criticizing General Motors Co. for making some of its compact cars in Mexico.

Since winning the presidential election in November, Mr. Trump has made a habit of targeting big businesses one by one, including United Technologies Inc., Boeing Co., and Lockheed Martin Corp., to name a few. A spokesman for his transition team said these individual critiques reflect a broader goal for the incoming Republican administration to rescue American workers.

"In this case, the tweet was specific to General Motors," spokesman Sean Spicer told Reuters. "But I think you've seen an overall philosophy during the campaign and since he was elected to stand up for American workers and make sure that American companies don't benefit from moving their companies overseas and leaving American workers behind."

Although not specific, Trump's Tuesday threat was clear: "General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border," he wrote. "Make in U.S.A. or pay big border tax!"

General Motors responded with a statement acknowledging that "a small number" of Cruze hatchbacks are manufactured in Mexico and sold in the United States. The overwhelming majority of Cruze models sold to Americans, however, are sedans – all of which are made in Lordstown, Ohio, the company said.

Of the 190,000 Cruze models sold in the US last year, only 4,500 – less than 2.4 percent – were hatchbacks made in Mexico, a GM spokesperson tells The Christian Science Monitor in an email. Although sales were down significantly last year, the Cruze is one of GM's best-selling cars.

Trump – who has denounced the North American Free Trade Agreement (NAFTA) among Mexico, the US, and Canada, which took effect in 1994 – did not specify how he would impose the tariff threatened in his tweet or how severe it would be. But the comment echoes past statements in which he has threatened to impose a 35 percent tax on foreign-made goods sold to Americans by companies that offshore American jobs, an idea economists have said would not work.

"Imposing tariffs or putting up trade barriers may sound good, but it will hurt our economy and credibility," Wendy Cutler, a former acting deputy US Trade Representative who helped negotiate the Trans-Pacific Partnership last year, told Reuters in March. And others point out that presidents lack the authority to impose tariffs unilaterally without congressional approval, as CBS Money Watch reported.

Hours after Trump's tweet about GM, rival carmaker Ford Motor Co. announced it would cancel plans to built a $1.6-billion factory in Mexico, instead investing $700 million at a factory in Michigan. Shortly before noon, Trump retweeted a link to a Fox News article praising him as "quite the job creator" for putting pressure on Ford and others to keep jobs stateside.

GM chief executive Mary Barra is among business leaders who sit on a council unveiled last month to advise Trump on job creation efforts.

Detroit's "Big Three" automakers – GM, Ford, and Chrysler – have all sought in recent years to produce more small cars in Mexico for the North American market in an effort to lower labor costs, while having American workers build trucks, sport utility vehicles, and luxury cars, which are more profitable.

In 2014, GM announced a $5-billion investment in its Mexican plants, creating 5,600 jobs. In November, GM announced plans to lay off nearly 2,000 employees at two US auto plants in early 2017, including at the facility in Lordstown.

GM will halt the third shift at the Lordstown plant on Jan. 23, cutting 1,250 jobs.

This report contains material from Reuters.