Latest warning over Trump’s trade wars with Canada, Mexico, EU, and China
Developments on Day 535 of the Trump Administration:
General Motors has warned Donald Trump that his tariffs will lead to “less investment, fewer jobs, and lower wages”.
GM said on Friday that Trump’s steel tariffs and his threat to impose duties on imports of cars and car parts, could raise vehicle prices up by thousands of dollars. Lower demand and slower production “could lead to a smaller GM”.
The auto giant said more tariffs will put US companies at a disadvantage in a “fast-paced transportation revolution led by cutting-edge technologies”: “The economic fortitude of companies like ours directly supports the economic strength of the nation, which, in turn, contributes to the security posture of the United States.”
GM has 47 manufacturing locations, 25 service-part facilities, and 110,000 employees in the US.
Driven by politics and protectionist advisors, Trump has imposed 25% steel and 10% aluminum tariffs on US allies such as Canada, Mexico, and the European Union. Duties have been levied on $34 billion of Chinese goods, with threats of tariffs on another $200 billion.
The measures are raising the cost of inputs such as steel for manufacturers like the auto industry. Trump’s threat to withdraw from or weaken the North American Free Trade Agreement challenges supply chains that integrate operations in the US, Canada, and Mexico. Manufacturers also face the burden of retaliatory tariffs by China, the EU, and others.
GM spokeswoman Dayna Hart said the company has no contingency plans calling for job cuts, but cautioned that it was “something that could happen”: “We are still assessing the impact.”
The White House made no comment.
Earlier this week the leading motorcycle manufacturer Harley-Davidson said it is moving some production outside the US because of tariffs that are being imposed on its American-made bikes. Trump responded with a Twitter tirade, “We won’t forget, and neither will your customers or your now very HAPPY competitors!”
Fiat Chrysler Automobiles is also considering move of manufacturing. The company’s Bob Lee said on Thursday, “It’s contingency planning on a massive scale — supply-based planning, logistics planning, vehicle-build location planning. This is not trivial, and it’s been going on for awhile.”
Trump’s Top Economic Advisor Lies: “Deficit Coming Down Rapidly”
The White House’s chief economic advisor Larry Kudlow falsely declared on Friday:
— FOX Business (@FoxBusiness) June 29, 2018
Kudlow insisted that the Trump Administration’s $1.5 trillion tax cut in December 2017 — the only major legislation passed by Congress during the Administration’s first 17 months — was bringing a surge in tax revenues.
In fact, the Congressional Budget Office said on June 7 that the federal deficit is $530 billion so far in the 2018 fiscal year — $97 billion more than at this point last year. On a 12-month basis, the deficit as a share of GDP rose to 3.8% in May from 3.2% one year earlier.
Economists have estimated that the tax cut will add $1.3 trillion to the deficit over the next 10 years. In its latest 10-year outlook report in April, the CBO projected that the federal budget will rise “substantially, boosting federal debt to nearly 100 percent of GDP by 2028”.
Kudlow later tried to modify his statement as an accurate projection, rather than a statement of the current situation:
Reached by phone, Kudlow told me his comment was meant prospectively.
It reflects his view not that deficits have come down sharply, but that they will be coming down as growth rises "faster than virtually any forecasters think."
— Nick Timiraos (@NickTimiraos) June 29, 2018