Trump attacks GM over Chevy Cruze production, threatens tax

January 3, 2017 10:58 AM

U.S. President-elect Donald Trump on Tuesday blasted General Motors Co. and threatened to impose a "big border tax" for making some Chevrolet Cruze cars in Mexico, which the U.S. carmaker defended as part of a strategy to serve global customers, not sell them in the United States.

"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!" Trump said in a post on Twitter.

GM said it makes its Cruze sedan in the United States and that all of those sold in the United States are made in a plant in Lordstown, Ohio.

"GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S." it said in a statement posed on its website without giving numbers.

Shares of GM rose 1 % to $35.19 after falling about 1 % following Trump's tweet before the market opened.

Last month. Trump announced the formation of a council to advise him on job creation, a group comprised of leaders from a variety of major U.S. corporations including GM Chief Executive Officer Mary Barra.

GM said in 2015 it would build its next-generation Chevrolet Cruze compact in Mexico as automakers look to expand in the Latin American nation to take advantage of low labor costs and free trade agreements.

GM said in 2015 it would invest $350 million to produce the Cruze at its plant in Coahuila as part of the $5 billion investment in its Mexican plants announced in 2014.

GM said earlier this year it would import some Cruze cars from Mexico.

According to Automotive News, GM began producing the Cruze in Mexico last year, making 52,631 cars there. In comparison, it built 319,536 of them in the United States. Previous versions of the Cruze sold in Mexico were made in a GM South Korea plant, it reported.

The shift is part of a larger trend among Detroit’s Big Three automakers to produce more small cars for the North American market in Mexico in an effort to lower labor costs, while using higher-paid U.S. workers to build more profitable trucks, sport utility vehicles and luxury cars.

In November, GM said it planned in early 2017 to lay off 2,000 employees at two U.S. auto plants, including the one in Lordstown. U.S. small car sales have been hurt by lagging consumer demand and low gas prices. GM's U.S. Cruze sales are down 18 % through November.

Representatives for the United Auto Workers union could not be reached immediately for a response to Trump's tweet.

Trump's comments are the latest in a string of Tweets targeted at companies over jobs, imports and costs before he takes office on Jan. 20, including United Technologies Corp's Carrier unit and U.S. defense companies.

The Republican, who will succeed Democratic President Barack Obama, campaigned with tough rhetoric on trade and promises to protect American workers and called out several companies by name, including GM rival Ford Motor Co.

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