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OpinionGM vs. Tariff Man

18:32  06 december  2018
18:32  06 december  2018 Source:   theweek.com

Apple's November rout worsens after Trump says US could place 10% tariff on iPhones

Apple's November rout worsens after Trump says US could place 10% tariff on iPhones Apple's November rout worsens after Trump says US could place 10% tariff on iPhones.

General Motors is warning the Trump administration that proposed tariffs could force the company to cut jobs and raise the price of cars, perhaps by thousands of dollars. GM said an auto tariff would probably raise the cost of making some cars by thousands of dollars.

GM vs . America? Wednesday, December 5, 2018 0:25. Here are two recent news stories about GM : GM to halt production at 5 plants in U.S. and Canada, cutting up to 14K jobs. Donald Trump Brags in Tweet: ‘I Am a Tariff Man ’. Q Anon: White Squall, Allow Us to Counter, Glimpse into the Shadows

GM vs. Tariff Man© Illustrated | Jeff Swensen/Getty Images A Chevrolet plant.

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of MSN or Microsoft.

"Tariff Man" is on a roll.

Last week, President Trump demanded that General Motors back off from its recently announced plans to idle several U.S. plants and layoff thousands of workers. Given the market pressures confronting the auto industry, this is like commanding GM to stop the tides. Then, this week, by dubbing himself "Tariff Man" on Twitter, he effectively killed the one thing that could have actually helped GM: the trade détente he had called just a few days earlier with China.

Trump studying new auto tariffs after GM restructuring

Trump studying new auto tariffs after GM restructuring Trump says studying new auto tariffs after GM restructuring

Trump vs . GM .

GM said it supports trade policies "that enable U.S. manufacturers to win and grow jobs in the U.S." Both automakers say they use mostly American-made Trump argues that the tariffs will bolster US production of steel and aluminum and combat unfair trade practices. But businesses outside the steel

For a businessman, Trump doesn't seem to know much about business.

What's a CEO like GM's Mary Barra to do? Her decision to shrink 10 percent of the company's North American workforce is backed by solid reasons that a "tough negotiator" like Trump ought to appreciate, especially the fact that she is trying to inject a dose of reality before union contract negotiations next year. The unions will be less inclined to demand steep pay hikes, Cadillac perks, and the moon when so many jobs are already on the line. This isn't because of "corporate greed at its worst," as Democrats such as Ohio's Sherrod Brown, who are joining Trump's tirades against GM, are maintaining. It's because after a decade of post-recession bumper sales, GM is expecting a permanent — not merely cyclical — drop in auto demand, thanks to the app-driven increase in ride-sharing and other technological changes. In the U.S. alone, car sales are expected to drop from over 17 million annually this year to 15 million by 2020. And painful though GM's retrenchment is, Barra rightly reckons it's far less so when the economy is booming and at full employment and the company is still profitable.

Tariff-driven price increases spreading through economy

Tariff-driven price increases spreading through economy Tariff effects broaden across U.S., wage growth higher: Fed

The threat of tariffs on auto imports is driving up used car values and lifting profits at Ford Credit and GM Financial. If President Trump has his way, an even bigger tariff headwind could be coming soon. Trump is strongly considering imposing 25% tariffs on auto imports in order to reduce the U.S. trade

General Motors , the country's biggest automaker with about 110,000 U.S. employees, warned the Trump administration's tariffs threaten to undermine its He's also imposing steep tariffs on foreign steel and aluminum. "The correlation between a decline in vehicle sales in the United States and the

What's more, Americans are not only buying fewer cars but switching from smaller to larger ones. So it makes sense that all the plants GM intends to mothball manufacture sedans such as the Buick LaCrosse, whose sales have dropped 45 percent over the last couple of years, and the Chevy Cruz, which has seen a 27 percent decline. At the same time, large vehicles have grown from 67 percent of its sales portfolio in 2015 to 80 percent now.

Nor is this because GM has ignored its small-car market share. Indeed, the green-shaming Obama administration made sure it didn't do so when it bailed it out from bankruptcy a decade ago. But dropping oil prices, rising fuel economy, and improving performance of larger vehicles has generated a titanic shift in consumer demand.

Everyone is affected. Earlier this year, Ford announced it was totally abandoning the sedan market. Even Asian manufacturers that have historically excelled at making affordable and quality small cars are shifting production to cross-overs, notes Patrick Anderson, CEO of Anderson Economic Group, a Michigan-based consulting company.

AP FACT CHECK: 'Tariff Man' Trump wrong on import taxes

AP FACT CHECK: 'Tariff Man' Trump wrong on import taxes President Donald Trump promised on Twitter that tariffs would maximize the country's economic heft and "MAKE AMERICA RICH AGAIN."Almost all economists say the president is wrong. That's because tariffs are taxes on imports. They can cause higher prices, reduce trade among countries and hurt overall economic growth as a result.The president's tweet on Tuesday followed an announcement that the U.S. would not increase a 10 percent tariff on $200 billion of Chinese goods in 2019. The two largest countries are in the middle of negotiating their terms of trade, after Trump said cheap imports from China were impoverishing the United States.

This video compares the effect of a tariff and a subsidy as a method of protecting domestic industries.

Tesla Inc. and General Motors Co. are caught in the middle of a collision between U.S. President Donald Trump and his China counterpart Xi Jinping. GM has for years vied with Volkswagen AG to be the biggest foreign automaker operating in China, while Elon Musk’s electric-vehicle manufacturer

These solid economic concerns are why, even as politicos from both sides of the aisle were beating up on GM, its stock went up nearly 5 percent when it announced its cuts.

But Trump will help neither GM — nor auto-workers — if he piles on his own demands that undercut the manufacturer's profitability. He is right the company ought to repay the outstanding $11 billion balance of bailout money, if for no other reason than to shed the lasting stigma of Government Motors. But Trump's insistence that GM keep open plants manufacturing vehicles consumers don't want will make it far more likely that the company will be back rattling its tin cup for a third taxpayer bailout during the next economic downturn — or else threaten to layoff even more workers, just as it did last time.

The worst thing Trump can do for GM, however, is remain on his protectionist tear. His tariffs on foreign steel and aluminum have cost the auto industry $1 billion — more than eviscerating GM's $157 million savings this year so far from Trump's corporate tax cuts. As trade attorney and Cato Institute fellow Scott Lincicome tweeted, this could have paid for a year's salary for 24,000 assembly line workers who make an average of $41,000 annually.

Alarming trade slowdown shows impact of Trump's tariff war

Alarming trade slowdown shows impact of Trump's tariff war Data from Swiss freight giant Kuehne + Nagel shows global trade grew 0.3% in November. In the same month last year, it grew 3.1%.

This video compares tariffs with quotas and shows how to analyze quotas using supply and demand. A key question addressed in this video pertains to who

The markets plunged after President Donald Trump unleashed a threatening tweet Tuesday morning. “President Xi and I want this deal to happen, and it probably will. But if not remember, I am a Tariff Man ,” Trump tweeted.

Nor is his renegotiated NAFTA going to help domestic automakers. Its requirement that 75 percent of components in car imports come from North America — up from 62 percent — instead of cheaper suppliers in Asia will significantly raise production costs for domestic carmakers, as will the $16 minimum wage requirement for Mexican autoworkers. All of this will mean higher auto prices just when demand is plummeting. But Trump's NAFTA deal is evidently not protectionist enough for many Democrats who are threatening to torpedo it when it comes up for ratification in the next Congress. And if Trump, who likes to play high-stakes poker, tears up the existing NAFTA and the new Congress refuses to approve the new one, domestic automakers will be in for a long period of uncertainty whose worst impact will be felt by their workers.

Then there is Trump's trade war with China. His triumphant tweet from the G-20 summit that China had agreed to scrap its 40-percent tariff on U.S. cars — up from 15 percent after Trump slapped China with tariffs — turned out to be fake news. But this tariff isn't that big of a deal since imports from America constitute only 1 percent of China's car market; the vast majority of cars that GM and other automakers sell in China are manufactured locally to save on transportation and other costs. The bigger problem is that Trump has already imposed a 10-percent tariff on $200 billion of Chinese goods that he is threatening to raise to 25 percent if China does not negotiate a satisfactory deal within the next 90 days.

If the two sides can't work things out — by no means unlikely — Trump will surely invite Chinese retaliation. But even if he doesn't, his own tariffs are, ultimately, taxes not on Chinese imports but on American consumers, who'll have to cough up more for shoes and clothes at Wal-Mart. And if they have less in their pocket, they'll scale back their expenditures on big-ticket items like cars, threatening auto jobs. In fact, since consumers who shop for Chinese goods also happen to be the ones working in GM-type factories, tariffs are a double whammy for exactly the people Trump is pledging to protect.

GM is doing the right and responsible thing for a change. Mr. Tariff Man's job is to not get in its way but to start making trade peace with the world. No country has enriched its workers by beggaring its neighbors and partners.

'I am a Tariff Man': Trump threatens to restart trade war if China talks fail.
In a series of Tuesday morning tweets, Trump showed optimism about reaching a " fair deal" with China but stressed that he is "a Tariff Man" if talks fail. The negotiations with China have already started. Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina. Bob Lighthizer will be working closely with Steve Mnuchin, Larry Kudlow, Wilbur Ross and Peter Navarro.....— Donald J. Trump (@realDonaldTrump) December 4, 2018 ......on seeing whether or not a REAL deal with China is actually possible. If it is, we will get it done.

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