Trump to carmakers: ‘Build more cars’ in the U.S.
Washington — President Donald Trump pressed automakers to build more vehicles in the U.S. during a meeting Friday with car company representatives, including CEOs from each of the Detroit Three.
The session, which was briefly opened to reporters, was the first joint trip by carmakers to the White House since January 2017. General Motors Co.’s Mary Barra, Ford Motor Co.’s Jim Hackett and Fiat Chrysler Automobiles’ Sergio Marchionne were there. Also attending were executives from Toyota, Nissan, Mercedes-Benz, BMW, Honda, Hyundai and Volkswagen.
The White House said the topic of the meeting would be gas-mileage rules that are currently under review, but Trump used his audience with the auto chiefs to demand they produce more of their products in the U.S.
“So these are the biggest in the world and we’re going to be talking to them. And we want them to build more cars in the United States,” Trump said. “And also, build them here and ship them overseas. We’re doing a reverse act, and that’s going to be something, I think, that’s happening, and we see it happening. A lot of it has to do with the great tax cuts and tax incentives that people have been given. And we have other incentives coming.”
The president heaped praise on Marchionne for the company’s plans to move production of its Ram Heavy Duty truck from Mexico to Michigan.
“That’s what we like. In fact, right now, he’s my favorite man in the room,” Trump said. “No, big announcement. And I’ll tell you, the people in Michigan very much appreciate it. It’s a big deal. Leaving Mexico; going to Michigan. That was very well received. I appreciate it. Thank you.”
The roundtable with the president came as the administration weighs major changes to gas mileage and trade rules. Among the proposals is a freeze in gas-mileage increases after 2020 and drastic alterations to rules for duty-free treatment under the North American Free Trade Agreement.
In talks with Canada and Mexico over NAFTA, U.S. negotiators have proposed increasing the minimum percentage of a car’s parts that must be made in one of the three countries — to 85 percent from 62.5 percent — in order to escape tariffs when it is imported to America. And they want to require that 50 percent of parts must come from the U.S. Automakers have lobbied against the proposed changes, arguing they would make it tougher for domestic manufacturer to compete with their international counterparts.
Trump indicated Friday that he is not worried that his proposed NAFTA changes will adversely affect the auto industry.
“Well, we’ll see what happens,” he said. “We’re negotiating NAFTA right now. I’ve never been a NAFTA fan, as you know. NAFTA has been a terrible deal for the United States and one of the worst trade deals in history.”
Automakers have been more favorable toward the administration’s efforts to ease gas-mileage rules that would have required them to produce fleets averaging 54.5 miles per gallon by 2025. They have argued the mileage rules are too stringent because car buyers have demonstrated a strong preference for sport utility vehicles and pickup trucks since gas prices in most of the country average $3 a gallon or lower.
Carmakers argue the Obama administration reneged on a promise to review the gas mileage rules in 2018 after they voluntarily agreed to them in 2012.
Marchionne said in a statement after the meeting that Trump is right to revisit the Obama-era mileage rules because “consumer preferences and technological advancements in our business are constantly evolving.
Marchionne added he is “optimistic that the president can find a means to preserve a national program that drives continuous improvement in vehicle efficiency and, at the same time, allows us to build vehicles customers want, at prices they can afford.”
GM and Ford declined to comment after the meeting.
Mitch Bainwol, president and CEO of the Alliance of Automobile Manufacturers, which lobbies for carmakers that operate in the U.S., and John Bozzella, president and CEO of the Association of Global Automakers, which represents international manufacturers, expressed hope for a compromise on the mileage rules after meeting Friday with Trump.
Automakers have expressed concern the Trump administration’s decision to reverse course on gas mileage rules could split the nation’s auto industry into two regions with distinct emission rules. California sets its own emissions standards under a waiver included in the 1970 Clean Air Act. A dozen other states have adopted the California rules, accounting for one-third of the U.S. auto market.
California and 16 other states are suing the Trump administration over its effort to freeze the fuel rules.
Environmental and consumer advocacy groups in Washington have railed against the Trump administration’s efforts to ease mileage standards.
“These standards are working exactly as they were designed to do – they are protecting our health and climate, driving innovation, saving Americans money at the gas pump, and reducing our reliance on oil,” the League of Conservation Voters, Environmental Defense Fund, Natural Resources Defense Council, Sierra Club and Union of Concerned Scientists wrote in a letter to auto CEOs published Thursday on Medium.com.
Michelle Krebs, senior analyst for Autotrader, said the auto industry should hope for a deal between the Trump administration and California to avoid a lengthy legal standoff that could stall development plans.
“The ideal outcome of today’s meetings would be a pathway for creating a single standard across the country – without an ugly battle with California,” she said. “That would mean both sides have to give some. That would be the best-case scenario.”
The fuel economy rules at issue were enacted in 2012 and began taking effect with the 2017 model year. They called for ramping up from the current fleet-wide average of about 35 miles per gallon for cars and trucks, to more than 37 miles per gallon in 2019 and nearly 39 miles per gallon in 2020.
The eventual goal of 54.5 was set for 2025. The target was later reduced slightly to between 50 and 52.6 miles per gallon, which equates to roughly 40 miles per gallon in real-world driving.
The CAFE rules, intended to reduce dependence on foreign oil and reduce greenhouse gases, were put in place by the Obama administration when gas prices topped $4 per gallon.
Under the Obama administration’s rules, automakers would have faced fines of $5.50 for each one-tenth of a mile-per-gallon their average fuel economy falls short of the standard for a model year, multiplied by the total volume of vehicles sold.