How a Trump tariff could sideswipe U.S. auto industry – Chicago Tribune

The threat from President Donald Trump to tax Mexican-made cars sold in the U.S. would throw the industry into disarray, analysts say, forcing some uncomfortable choices: Raise car prices or swallow the cost. Stop selling Mexican-made cars in the U.S. but risk losing customers. Move production to the U.S. but make less money.

“I don’t think the auto industry would turn up its feet and die, but it would be a terrible shock. It would create mayhem with their profitability,” said Marina Whitman, a business professor at the University of Michigan and a former vice president at General Motors Co.

Trump will be hosting a breakfast meeting Tuesday with the heads of General Motors, Ford Motor Co. and Fiat Chrysler Automobiles. On Monday he reiterated his warning to impose a “substantial border tax” on companies that move their manufacturing out of the United States. He also promised tax advantages to companies that produce products domestically.

For more than two decades, Mexico has been an oasis for the auto industry, offering cheap labor and access to dozens of markets through free-trade deals. Whitman says Detroit automakers can’t build small cars profitably in the U.S., where a unionized auto worker can make $58 an hour in wages and benefits. By comparison, a Mexican auto assembly worker makes a little more than $8.

How a Trump tariff could sideswipe U.S. auto industry – Chicago Tribune