Automakers Play Nice With Trump, Silently Hope Tariff Talk Was Bluster

Not knowing what to expect from President-elect Donald Trump once he moves into the White House, automakers spend yesterday issuing nice-sounding congratulatory messages that masked an industry-wide concern over what happens next.

Formal pleasantries aside, one automaker feels that Trump’s policies could stand to benefit its bottom line.

Trump’s campaign promises reeked of protectionism, but time will tell whether his policies in office reflect his hard-line stance on keeping jobs in America at all costs. Automakers are obviously quite concerned with costs, otherwise they wouldn’t make a habit of sending low-profit small car production to Mexico.

Yesterday, however, car manufacturers kept their worries in the background. Statements issued by all Detroit Three automakers appealed to a sense of cooperation.

From General Motors:

GM congratulates both candidates and parties on their hard-fought campaigns. GM looks forward to working with President-elect Donald J. Trump and the new Congress on policies that support a strong and competitive U.S. manufacturing base.

GM will continue to do its part to transform the future of mobility and contribute to America’s competitive strength.

Christin Baker, spokeswoman for Ford Motor Company, said, “We agree with Mr. Trump that it is really important to unite the country, and we look forward to working together to support economic growth and jobs.”

The acrimonious relationship between the automaker and Trump only grew during the election campaign, which kicked off with a promise to tax Ford products imported from Mexican plants to the tune of 35 percent. That promise also went for other automakers.

Fiat-Chrysler Automobiles offered a similar statement:

FCA US looks forward to working with President-elect Donald J. Trump and the new Congress to strengthen American manufacturing and build a more secure future for our employees, customers and society.

Industry watchers have doubts as to whether Trump could actually follow through on his promise to scrap the North American Free Trade Agreement. Such a move, if doable, would heap costs onto smaller vehicles imported from Mexico, inflating prices and putting domestic manufacturers at a sales disadvantage in their own country.

Donald Grimes, economist at the University of Michigan, told Bloomberg that repealing NAFTA might not require congressional approval. A trade war could erupt if the U.S. goes this route, he said, with World Trade Organization members striking back with their own tariffs if Trump uses anti-dumping provisions to boost taxes on incoming vehicles. German manufacturers expressed concern over this prior to the election.

Many analysts have claimed Trump’s trade rhetoric amounts to nothing more than campaign bluster. As well, the WTO hasn’t gone easy on countries that have used the anti-dumping provision. Two years ago, the body ruled against China after that country placed a raft of taxes on imported American vehicles.

The Detroit Three, as well as Toyota and Honda, also have assembly plants in Canada. Following Trump’s win, Canada has signaled its willingness to renegotiate NAFTA.

One automaker with overseas headquarters sees a potential silver lining in Trump’s win. Speaking to Auto Express, Volkswagen brand chief Herbert Diess said news of Trump’s win surprised him, but added that his presidency could stand to help the company.

“The first comments from Mr Trump have two potential interpretations, but the majority of people seem to be saying that his plans might boost the American economy,” Diess said. “That would be favourable for us, because we are restarting in the United States. So I see it optimistically.”

[Sources: Detroit Free Pres s; Reuters]