Daily Management Review

'Smaller' Company, Lesser Jobs Could Result From U.S. Import Tariffs: GM Says


06/30/2018




'Smaller' Company, Lesser Jobs Could Result From U.S. Import Tariffs: GM Says
There can be job losses and “a smaller GM” while there would be isolation of U.S. businesses from the global market if the US administration imposes the higher import tariffs on vehicles as has been announced to be under consideration, warned General Motors Co.
 
While U.S. President Donald Trump has threatened a number of time of imposing a 20 per cent tariff on imported vehicles, the US administration initiated in inquiry in May about whether foreign vehicles imported into the country was a source of threat to national security.
 
Overly broad tariffs could “lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs”, said the US car maker in its comments to the U.S. Commerce Department.
 
GM said that sales could be reduced because vehicles prices would rise due to higher tariffs.
 
Similar sentiments were earlier expressed by two more major US auto trade groups on Wednesday warning that hundreds of thousands of auto jobs could get lost, a possible dramatic rise in auto prices and stunted investments in self-driving cars would result from a import tariffs of up to 25 percent on imported vehicles.
 
GN said that even if the higher costs were decided not to be passed onto customers by automakers, “this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies.”
 
About 110000 people are employed in the 47 manufacturing facilities of the GM in the US. Every year, parts worth tens of billions of dollars is bought by the company from U.S. suppliers and since 2009, about $22 billion has been invested by the company in U.S. manufacturing operations.
 
Still, according to the Michigan-based Center for Automotive Research, about 30 percent of the vehicles sold by GM in the U.S. market in 2017 were manufactured abroad. Among that number, Canada and Mexico accounted for 86 per cent while the rest was manufactured in Europe and China.
 
Many of the vehicles that are sold in the United States are imported by Detroit automakers Ford Motor Co and Fiat-Chrysler Automobiles NV.
 
“The overbroad and steep application of import tariffs on our trading partners risks isolating U.S. businesses like GM from the global market that helps to preserve and grow our strength here at home,” GM said.
 
There are some analysts who claim that the decision of conducting an investigation into the national security angle for imported vehicles by Trump is to put pressure on Canada and Mexico to agree to the US terms for the renegotiated North American Free Trade Agreement.
 
(Source:www.reuters.com)






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