“General Motors is sending Mexican made model of Chevy Cruze to United States car-dealers tax free across the border. Make in USA or pay big border tax!” threatened President Donald Trump on January 3, 2017. Sitting in the White House 21 days later, the 45th President welcomed leaders from big three US automakers Fiat Chrysler (FCAU), Ford (F) and General Motors (GM) for a breakfast meeting.
Employing 230,000 people in the US – up 50% since 2008 – who actually benefit from above-average paying jobs, the US auto industry has built around 11.5 million vehicles in the US last year (2016) compared to 3.45 in Mexico and 2.35 in Canada.
Following disappointing sales in the second semester of 2016, Trump’s executive orders to withdraw from the Trans-Pacific Partnership (TPP) and to re-negotiate the North American Free Trade Agreement (NAFTA) could help the automotive sector to keep growing as US cars already dominate the sector representing 55% of all cars bought in the US.
Tax cuts, reduced regulations especially environmental ones and made-in-USA policies have been deemed positive developments by business leaders like Ford CEO Mark Fields who said it “encourages all of us (…) as we make decisions going forward.”
Cyceon also noticed a clear indication of what could happen next, especially regarding US-China relations, when Fields stressed that “the mother of all trade barriers is currency manipulation,” something Trump repeatedly accused Beijing of using as a means for unfair trade competition.
Simultaneously, Trump’s detractors replied that former President Barack Obama should be given credit for saving the auto industry during the global financial crisis. Fiat Chrysler, Ford and General Motors shares have surged 152%, 68% and 40% over the last five years, and Cyceon would mostly base any investment on strong sales figures more than on political developments of which the effects have yet to unfold.