General Motors Warns of Higher Prices and Job Cuts Due to Trump’s Trade War

General Motors Warns of Higher Prices and Job Cuts Due to Trump's Trade War

General Motors warned on Friday that expansive US tariffs on imported vehicles being considered by the Trump administration could lead to “a smaller GM” and risks isolating US businesses from the global market.

The car giant – which employs 180,000 people worldwide – became the second famous US brand this week to warn of the dangers of Trump’s escalating trade dispute. This week Harley-Davidson said the levies would force it to relocate some production overseas – a warning that drew a furious response from Donald Trump.

The Trump administration launched an investigation into whether imported vehicles posed a national security threat in May, and Trump has repeatedly threatened to quickly impose a 20% import tariff on vehicles.

The largest US automaker said in comments filed on Friday with the US commerce department that 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 – US jobs”.

GM said the tariffs could hike vehicle prices and reduce sales. Even if automakers opted not to pass on higher costs “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.”

Toyota filed separate comments opposing the tariffs on Friday saying they would “threaten US manufacturing, jobs, exports, and economic prosperity”.

The company noted that Trump has repeatedly praised the automaker for investing in the United States, including a new $1.3bn joint venture assembly plant in Alabama with Mazda.

“These investments reflect our confidence in the US economy and in the power of the administration’s tax cuts,” Toyota said in its submission.

Toyota noted that international automakers assembling vehicles in the United States are based in countries including Japan, German and South Korea “that are America’s closest allies”.

The company added it “is difficult to foresee a situation in which any of them would engage in an armed conflict with the US or cut off supplies of defense materials, and if they did, the United States would have an easy recourse of simply seizing their US plants.”

The car companies’ comments come after groups representing America’s largest retailers, car manufacturers and the agriculture industry warned of the “serious negative economic impacts” of the trade dispute and called on Congress to support a bill that would rein in the president’s power to impose tariffs by invoking a threat to national security.

“It is now also increasingly clear that the way the steel and aluminum tariffs have been used will result in retaliatory tariffs from our largest trading partners and closest allies, and that retaliation will have serious negative economic impacts on the United States,” they wrote in a letter to US senators.