President-elect Donald Trump sent a threat Tuesday to General Motors: Make the Chevrolet Cruze in the United States or face a heavy tax.
“General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border,” Trump tweeted. “Make in U.S.A.or pay big border tax!”
GM, in a statement, stressed that it makes the sedan version of the Cruze at its plant in Lordstown, Ohio. It makes the Cruze hatchback, mostly meant for international markets, in Mexico.
In November, GM sold about 16,400 Cruzes in the United States. About 1,600 of those were Mexican-made hatchbacks.
The company employs about 100,000 people in the U.S. and 15,000 in Mexico. In December, Trump named GM’s CEO, Mary Barra, to a panel on job creation.
GM is far from the only automotive manufacturer that produces across the border: Ford, Honda, Toyota and Volkswagen also make cars in Mexico and sell in the United States.
Trump has repeatedly told automakers that he intends to impose a 35% tax on cars they build in Mexico for the U.S. market. Trump could not impose a tariff on an individual company solely for manufacturing products overseas and selling in the United States.
Before the election, he directed similar warnings toward Ford, which employs 8,800 people in Mexico, or about one-tenth of the jobs it has stateside.
Large tariffs would mean that Americans would pay more. When President Ronald Reagan put a quota on the number of cars Japan could ship to the United States, American carmakers hiked prices by $1,000 on average, knowing they would face less foreign competition.
Any tariff would also not likely be limited to American automakers like GM or Ford. If that were the case, those cars would be more expensive than others who also produce in Mexico and sell here, like Honda, Toyota and Volkswagen.
Ford and GM would then be left open to losing in their home market to foreign competitors — a consequence experts say probably wouldn’t bode well for Trump.
–CNNMoney’s Patrick Gillespie contributed to this story.
