Daily Management Review

Trump Administration Urged To End Trade Uncertainty By Top Global Auto Leaders


Claiming the political instability was costing the global auto industry, the Trump administration and the United States Congress was urged by top global auto executives gathered in Detroit to resolve trade disputes and the US government shutdown.
While a new regional trade agreement between the US, Mexico and Canada requires to be approved by the Congress, the trade war with China is being attempted to be ended by negotiations between U.S. and Chinese trade officials for a new trade deal. The higher import tariffs on steel and aluminium imposed by the Trump administration during the middle of last year is hurting the US automakers and those foreign companies that have manufacturing units in the US.
There would be an increase of costs of costs by $300 million to $350 million, or about $135 to $160 a vehicle for Fiat Chrysler Automobiles NV from production in the US for 2019 on the basis of sale figures of the company for 2018, claimed the firm’s Chief Executive Mike Manley at the Detroit auto show.
The higher tariffs has also forced Toyota Motor Corp to raise its prices three time despite the fact that about 96 percent of the steel used in vehicles manufactured in the U.S. is form steel plants in the country, the company’s executive vice president for North American sales, Bob Carter.
The U.S. steel and aluminium tariffs is also affecting costs for General Motors Co and Ford Motor Co.
“Those are headwinds,” GM President Mark Reuss. “It’s our job to run the business to offset those headwinds.”
Despite tariff-related costs and investments in electric vehicles, GM pledged to increase its 2019 profits, claimed the company’s Chief Executive Mary Barra last Friday. She however reiterated to the company’s announced plan of closing down of five North American factories and retrenchment of about 15,000 jobs.
There has been a partial shutdown of the US government since December 22 after the Congress refused to approve funding for US president Donald Trump’s plans of building a border wall with Mexico.
The process of certification of one of the new heavy duty pickup truck models of Fiat are held up because of the shutdown, said Manley. Those vehicles are among the company’s most profitable products. “The earlier it can be resolved, clearly the better,” he said.
Forecasters have predicted a slowdown in demand for vehicles in the US and China in 2019 because of the uncertainty created by Trump’s efforts to revamp trade and environmental policies.
“There’s a lot of balls in the air right now that are unresolved,” Ford Executive Chairman Bill Ford Jr. told the media at the auto show. “Certainty is something we really desire because of our product lead times. We don’t have that right now.”
Wang Qiujing, head of Chinese automaker GAC’s research and development center said that the firm’s plans to enter the US market has been put on hold because of the U.S.-China trade tensions. “We have postponed our launch until the first half of 2020,” he said, adding that the timing will depend on the outcome of U.S.-China trade negotiations. If the current 25 percent U.S. tariff on Chinese-made vehicles continues, “the impact will be very significant,” he said.