General Motors warns Trump's tariffs may lead to "a smaller GM" and fewer jobs
General Motors, the country's biggest automaker with about 110,000 U.S. employees, warned the Trump administration's tariffs threaten to undermine its competitiveness and could lead to "a smaller GM."
In a filing with the Commerce Department, the auto giant said the trade actions pursued by President Donald Trump will add risks, including higher costs that could spiral into more expensive car prices and a subsequent decline in vehicle sales.
Mr. Trump has threatened to slap tariffs on imported cars and parts, which could raise auto prices in the U.S. by roughly 10 percent, according to economists and industry analysts. He's also imposing steep tariffs on foreign steel and aluminum.
"The correlation between a decline in vehicle sales in the United States and the negative impact on our workforce here, which, in turn threatens jobs in the supply base and surrounding communities, cannot be ignored," the company said in the statement.
In an emailed statement, Commerce Secretary Wilbur Ross said the agency has received about 2,500 comments, and that it expects more before the midnight deadline on Friday.
"The purpose of the comment period and of the public hearing scheduled for July 19th and 20th is to make sure that all stakeholders' views are heard, both pro and con," Ross said. "That will enable us to make our best informed recommendation to the President."
If GM swallows the higher costs from the tariffs, it would need to cut investment, lower its wages for workers and hire fewer people, it said.
A 20 percent tariff on EU auto imports may cost 100,000 U.S. jobs in 2019 alone, economists at Oxford Economics forecast in a June 28 note. Another analysis estimated losses as high as 195,000 over three years if 25 percent tariffs are applied broadly.
Because the tariffs would inject "uncertainty" into the U.S. economy, the "total shock" could be twice as large, the Oxford analysts wrote. It would also be felt quickly. Mostly luxury brands would be hit, such as Audi, BMW and Mercedes, "but higher import prices for parts could affect the pricing of mid-range vehicles produced in the U.S. like Volkswagen," the analysts wrote.
Consumers may see an average price increase of $5,800 from a 25 percent import tariff, according to estimates cited by the Alliance of Automobile Manufacturers (AAM), a lobbying group for carmakers. That's a "$45 billion tax on consumers," the group said, citing an analysis of Commerce Department data.
"The penalties we could incur from tariffs and increased costs will be detrimental to the future industrial strength and readiness of manufacturing operations in the United States, and could lead to negative consequences for our company and U.S. economic security," GM said in the Friday filing.
It added, "U.S. auto companies need U.S. trade deals that recognize the strength that comes from global operations and a global supply chain."
CBS MoneyWatch writer Rachel Layne contributed to this report.
