Trump wants to tax General Motors on imported cars

Globalization, balance of trade and free trade do not seem to be part of the vocabulary of Donald Trump. The latter, in the wake of threats made during the election campaign, said in a tweet, its mode of communication favorite, that he wanted to come back clearly to the “made in USA”. In the collimator, neither more nor less than the giant of Detroit, General Motors, which has the right to go to conquer other markets beyond the borders, but who needs to sell his home the only vehicles that are manufactured here.

Trump wants to tax the american cars built in Mexico

“General Motors book cars Chevy Cruze, made in Mexico, to its dealers in the United States without paying the tax. Manufacture in the United States or pay a heavy tax border”, has tweeted the president-elect, who will take office on January 20.

During the election campaign, Donald Trump had already criticized the trade agreements negotiated by his predecessors, whom he accused of being responsible for the loss of millions of industrial jobs in the United States. He had promised to denounce the free trade Agreement north american (NAFTA), which binds the United States, Canada and Mexico for the past 22 years.

GM is not the only industry player in Mexico, as you can see here

This agreement has a specificity that causes the ire of Donald Trump, it allows General Motors – but it is not the only one, of the manufacture in Mexico and import to the United States duty-free. A regional advantage, which has helped it to establish the expansion of the industry mexican with a hourly cost of the worker much less than the hourly rate american. It is so true that other operators such as the group Volkswagen or Nissan settled there, bringing the mexican production of a little less than 2 million cars in 2000 to 5 million expected in 2022.

“Shame, absolute”

Trump veut taxer les voitures américaines construites au Mexique ©  DR
Trump wants to tax the american cars built in Mexico and, in particular, this Chevrolet Cruze © DR

Mr. Trump had qualified as shame absolute in April 2016 the decision of Ford to invest in Mexico, during a speech on his economic program in Detroit. There had also argued that, since the entry into force of Nafta in 1994, the number of employees in the automotive industry in the State of Michigan, where Detroit, was increased from 285 000 to 160 000. Things are further complicated in November last with the insistence of Donald Trump to re-establish customs duties disincentives that do not fail ofalarming the manufacturers installed in Mexico. In fact, they are strategic assets comm’ Audi, which also manufactures its new Q5 in Mexico in a plant manufacturing cost 50 % lower than that of the plant of the Tennessee.

But things are not so simple for Trump, as the third Nafta partner, Canada, do not intend to pay for the broken pots. He had taken in the past, for its development, a canadian dollar that is less expensive than the american, but he can do nothing more in the face of the mexican peso. And this is despite a recognised qualification, superior technicians.

Trump veut taxer les voitures américaines construites au Mexique
It was at a time when Canadians were building the Cruze.

Canada suffers from these strategic options for the benefit of the south, denouncing investment ten times higher in Mexico than in Ontario, the province next to Michigan and became Windsor, a suburb of Detroit. 25 % of cars manufactured in North America were in Canada before the 2008 crisis, compared to only 15 % today, according to figures provided by Uniforms, the largest supplier of equipment to canada. What will be the abritrage Donald Trump on a triangular folder ? A decision in the case of Mexico will necessarily have an impact on Canada.

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