General Motors warned Friday that President Trump’s threatened tariffs on imported vehicles could lead to “a smaller GM,” isolate US businesses from the global marketplace and cause job losses.
“Increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — US jobs,” the Detroit-based automaker said in comments filed with the Commerce Department, The Street reported.
“Combined with the other trade actions currently being pursued by the US Government — namely the Section 232 Steel and Aluminum tariffs and the Section 301 tariffs against Chinese imports — the threat of additional tariffs on automobile imports could be detrimental to our company. At some point, this tariff impact will be felt by customers,” GM said.
Trump announced in May that Commerce Secretary Wilbur Ross would investigate the need for tariffs on automobiles and automotive parts — and the commander in chief has railed in particular against imported German luxury cars like Mercedes and BMWs.
Team Trump is reportedly eyeballing a 25 percent tariff, and the president said in a tweet on Tuesday that the study of tariffs on cars from the EU was wrapping up.
“We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out – and it won’t take very long!” Trump tweeted.
A 25 percent tariff could mean the loss of as much as two million vehicle sales for the US auto industry, Jeff Schuster, senior vice president of forecasting at LMC Automotive, told The Street.
Schuster’s forecast assumes that the tariff would be in place for longer than a year and a majority of the tariff would be passed to consumers, leading to a loss of about 1 million annual vehicle sales.
Should companies decide to pass on the entire 25 percent tariff to consumers, it could lead to a decline of about 2 million vehicle sales, or more than 10 percent of annual US deliveries, Schuster said.
Meanwhile, Canada announced billions of dollars in retaliatory tariffs against the US on Friday in a tit-for-tat response to the Trump administration’s duties on Canadian steel and aluminum.
Prime Minister Justin Trudeau’s government released the final list of items that will be targeted beginning July 1 and said that some items will be subject to taxes of 10 or 25 percent.
“We will not escalate and we will not back down,” Canadian Foreign Minister Chrystia Freeland said.
The taxes on imported items including whiskey, ketchup, lawn mowers, motor boats and dozens of other items add up to $12.6 billion.
“This is a perfectly reciprocal action,” Freeland said. “It is a dollar for dollar response.”
Freeland said Canada had no other choice and called the tariffs regrettable.
Many of the US products were chosen for their political rather than economic impact.
For example, Canada imports just $3 million worth of yogurt from the States annually and most of it comes from one plant in Wisconsin, the home state of House Speaker Paul Ryan. The product will now be hit with a 10 percent duty.
Another product on the list is whiskey, which comes from Tennessee and Kentucky, the latter of which is the home state of Republican Senate leader Mitch McConnell.
Freeland also said the nation is prepared if Trump escalates the trade war.
“It is absolutely imperative that common sense should prevail,” she said. “Having said that our approach from day one of the NAFTA negotiations has been to hope for the best but prepare for the worst.”
With AP
