Trump: Tax on Mexican-built cars seeks ‘retribution’

Chad Livengood
Detroit News Lansing Bureau

Detroit — Donald Trump says his proposed tariff on Mexican-built vehicles and parts would serve as “retribution” against Ford Motor Co. and other automakers that move production south of the border.

The 2016 Ford Fiesta is built by Ford in Mexico.

After speaking at a black church on Detroit’s west side, the Republican presidential candidate renewed Saturday his criticism of the Ford Motor Co. for announcing plans to build new factories or expand existing facilities in Mexico. The Dearborn automaker has been a target of the bombastic billionaire on the campaign trail over the past year.

“Right now, there’s no consequence. They take their factory, they leave, they fire everybody in Michigan … and after they fire everybody, they build cars in a different country and they just sell them to us and there’s no retribution, there’s no consequence that will stop them from leaving,” Trump said in an interview with The Detroit News during his visit to the Motor City.

“Right now in Mexico, they’re building massive plants for Ford Motor Co. to move in and build cars and trucks and Michigan and they’re going to leave Michigan – not going to happen if I’m president,” Trump said.

Ford plans to build a new $1.6 billion assembly plant in San Luis Potosi, Mexico, for unspecified vehicles. But it is expected that Ford will make the Focus and C-Max cars, whose production at the Michigan Assembly Plant in Wayne is being ended in 2018.

The Dearborn-based automaker has said it will employ 2,800 at the new Mexican plant by 2020, but the automaker has never said truck production would be moved to Mexico as Trump suggested Saturday, and has recently moved some truck production from Mexico to the United States. Ford does not assemble its trucks in Mexican plants, but Detroit Three rivals General Motors Co. and Fiat Chrysler Automobiles do have truck assembly plants in Mexico.

The Dearborn automaker last year moved production of its F-650 and F-750 medium-duty trucks from Mexico to its Ohio Assembly Plant in Avon Lake. The move was part of its 2011 agreement with the United Auto Workers that added 1,000 jobs and $168 million worth of investment at the Ohio plant.

Ford also is spending $1.1 billion to expand an engine plant in Chihuahua and another $1.2 billion to build a new transmission plant in the Mexican state of Guanajuato that is projected to employ 2,000 workers by 2018.

Ford Executive Chairman Bill Ford Jr. has defended the automaker by saying it actually is a model for doing things right.

“In my mind, Ford ought to be the company that’s being held up as a real success story,” Ford told reporters after a speech in May at an entrepreneurs’ conference in Detroit. “We didn’t take the bailout, we paid back our debts, we pulled ourselves up by our bootstraps. We’re investing in America. We’re exporting out of America. And so, I think we have a great story to tell.”

On Saturday, Trump said he’s not locked into the 35 percent tariff rate that he talked about for a year on the campaign trail until signaling a more flexible approach in an interview with The Detroit News last month in Toledo.

“The tariff is going to be a block for them leaving,” Trump told The News. “In other words, if they have to pay a certain tax – and it doesn’t have to be 35 percent, it could be 10 percent – but if they’re going to have to pay a tariff or tax to bring the cars back (into the U.S.), they’re not going to leave.”

The New York businessman has made renegotiating the North American Free Trade Agreement a cornerstone of his campaign for the White House, specifically targetting Democratic rival Hillary Clinton on the issue because her husband, former President Bill Clinton, signed the trade pact in 1993. The former president is scheduled to be in the Detroit Labor Day parade on Monday.

In a speech in suburban Lansing two weeks ago, Trump warned blue-collar voters that “Mexico will become the car capital of the world very, very quickly… unless you elect Donald Trump.”

But Ford says Mexico ranks fourth among countries where it makes its vehicles for global customers behind the United States, China and Germany.

Trump’s tariffs could serve as leverage with the Mexican government and American corporations in future NAFTA renegotiations.

“If they want to go to a different state or different part of Michigan, that’s fine,” Trump said of automakers. “But they can’t leave our country so easily and we just allow it to happen.”

The New York businessman has said his proposed tariff would sail through Congress, but House Speaker Paul Ryan, R-Wisconsin, is a free-trade advocate who has lauded past trade deals. Ryan said in late June that he also is seeking “good trade agreements” like Trump.

Clinton has proposed an “exit tax” at an undefined rate for companies that move their headquarters overseas to avoid America’s high corporate income tax rate. And the former secretary of state has said she would move to overhaul NAFTA, but she has not divulged specific changes she would seek.

Trump said undoing the 23-year-old trade deal with Mexico and Canada would be “so simple.”

“But the problem is that these politicians like Clinton are all controlled by their special interests, where there’s value for people to have car companies … and many other companies leave Michigan and our other states, go to Mexico and abandon all of the jobs and all of the taxes that they were paying here,” Trump said. “So that will stop.”

Staff auto writer Michael Martinez contributed

(517) 371-3661

Twitter: @ChadLivengood