Republican presidential candidate and billionaire Donald Trump threatened Ford Motor Co. with punitive taxes if the Dearborn automaker proceeds with a new $2.5 billion Mexican plant that will “take away thousands” of U.S. jobs.
Trump, who announced his plans to run at an appearance in New York on Tuesday, vowed to impose 35 percent taxes on imported Ford vehicles and parts coming from the new Mexican plant.
Trump said he would call Ford CEO Mark Fields — whom he identified only as “the head of Ford” — to explain the “bad news.”
“Let me give you the bad news: every car, every truck and every part manufactured in this plant that comes across the border, we’re going to charge you a 35 percent tax — OK? — and that tax is going to be paid simultaneously with the transaction,” Trump said. “They are going to take away thousands of jobs.”
In April, Ford said it would add 3,800 jobs in Mexico as part of a $2.5 billion investment — on top of the 11,300 Ford already employs in Mexico. The investment will include a new engine plant and new transmission plant allowing for exports of engines to the United States and elsewhere.
Trump has been pitching the proposal to tax Ford in a series of speeches in Iowa, North Carolina and around the country since May.
Trump said Ford would try to get donors and lobbyists to pressure him not to act. But Trump said he would not listen. He said the automaker would decide against the plant: “They’ll say, ‘Mr. President we’ve decided to move the plant back to the United States — we’re not going to build it in Mexico.’ That’s it. They have no choice.”
He said Ford was a good company and that he knew the head of Ford personally.
Asked about Trump’s criticism, Ford spokeswoman Christin Baker pointed to the Dearborn automaker’s U.S. investments.
“We are proud that we have invested $6.2 billion in our U.S. plants since 2011 and hired nearly 25,000 U.S. employees. Overall, 80 percent of our North American investment annually is in the U.S., and 97 percent of our North American engineering is conducted in the U.S.,” she said.
Under the North American Free Trade Agreement and existing U.S. tax laws, it is not clear how Trump could take such an action unilaterally. Nearly all major automakers already have major plants in Mexico, including Detroit’s Big Three automakers.
Singling out one new auto plant for punitive taxes would almost certainly not be legal under American law. Companies are free to build plants where they want.
Automakers are bypassing the U.S. for new plants in part because Mexico has dozens of free trade agreements around the world, low wages, free or nearly free land on which to build and fewer regulatory hurdles. The investments also put pressure on the United Auto Workers upcoming contract talks with Detroit’s Big Three automakers since U.S. automakers will emphasize competitive pressures in talks.
BMW AG, Volkswagen AG and its Audi unit, Nissan Motor Co., Kia Motors, and Fiat Chrysler Automobiles NV are among the automakers that have built or announced new plants or plant expansions — part of more than $20 billion in investments made or planned for Mexico since 2010. IHS Automotive predicts Mexican production will rise from 3.2 million last year to 5.1 million vehicles in 2020.
Nearly all of the vehicles built in Mexico are exported to the United States.
Trump made auto issues a big part of his announcement speech in New York. He asked when was “the last time you saw a Chevrolet in Tokyo? It doesn’t exist, folks,” Trump said, even as Japanese automakers sell millions of cars and trucks in the United States. “They are laughing at us at our stupidity.”
General Motors spokesman Ataf Farah said GM does in fact sell four Chevrolet models in Japan — the Chevrolet Sonic, Captiva, Camaro and Corvette. But GM sales are extremely limited in Japan with just 1,204 vehicles last year.