President-elect Donald Trump threatened General Motors Co. Tuesday with a “big border tax” for moving its Chevy Cruze model production to Mexico.
Trump tweeted out at 7:30 a.m. Tuesday morning: “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!”
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!
— Donald J. Trump (@realDonaldTrump) January 3, 2017
General Motors stressed in a press release that it makes its Chevy Cruze model in Lordstown, Ohio. In clarification, the firm said it “builds the Chevy Cruze hatchback for global markets in Mexico, with a small number sold in the U.S.” While the president-elect has repeatedly promised to impose a burdensome 35 percent tax on automakers that move operations to Mexico, he would not have the power to impose a tariff on a firm unilaterally. (RELATED: More Companies Moving To Mexico, Finding Fewer Laborers To Fill Jobs)
Trump has also taken aim at other automakers, like Ford, for having large-scale production facilities in Mexico.
The president-elect proposes a one-time repatriation tax for companies with billions of dollars overseas, although it is unclear whether or not that will be enough incentive for firms like General Motors or Ford to move operations back to the U.S. If a tariff like the one Trump threatens were imposed, it would affect all automakers equally.
Producing cars domestically means, for automakers, paying higher wages and benefits packages to U.S. employees. This would, in turn, mean inflated ticket prices for Americans looking to buy a car. Experts also warn that if domestic car prices rose due to such a tariff, it could leave U.S. automakers at a comparative disadvantage to foreign competitors, CNN Money reports.
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