In the wake of General Motors' announcement Monday that it plans to close three assembly plants in the U.S. and lay off thousands of workers, President Donald Trump threatened on Twitter Wednesday that he could increase import taxes on passenger cars to match those levied on trucks.
In a pair of tweets, Trump cited a long-standing 25-percent tariff on trucks as the reason trucks sell do so well for American automakers. He also suggested his administration will look into expanding that tariff to passenger cars to make sure more cars are built in the U.S.
The reason that the small truck business in the U.S. is such a go to favorite is that, for many years, Tariffs of 25% have been put on small trucks coming into our country. It is called the “chicken tax.” If we did that with cars coming in, many more cars would be built here.....— Donald J. Trump (@realDonaldTrump) November 28, 2018
.....and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress. Also, the countries that send us cars have taken advantage of the U.S. for decades. The President has great power on this issue - Because of the G.M. event, it is being studied now!— Donald J. Trump (@realDonaldTrump) November 28, 2018
U.S. Trade Representative Robert Lighthizer said Wednesday that Trump ordered a new review on the auto trade war with China. As a result of the U.S.' decision to levy a 27.5-percent tariff on Chinese cars imported to the U.S., China now charges a 40-percent tariff on American cars exported to the Asian country. Trump and Chinese leader Xi Jinping are due to meet on the sidelines of the Group of 20 summit in Buenos Aires on Friday.
Trump's tweets Wednesday seem to address cars imported from other Asian countries and Europe since the U.S., Mexico, and Canada recently re-negotiated a trade agreement that covers the three major North American markets.
Thanks in part to relatively inexpensive gasoline, consumers have shifted strongly in favor of crossover SUVs and pickups and away from passenger cars. Ford said earlier this year that it will drop all sedans and hatchbacks from its lineup in the U.S. and GM's announcement Monday spelled the end of the road for its Cruze compact sedan and hatchback as well as some of its full-size sedans. Fiat Chrysler Automobiles discontinued its compact and mid-size sedans a few years ago.
However, Detroit automakers are not alone in re-evaluating cars in the U.S. Toyota's U.S.-market CEO earlier this month indicated the Japanese automaker may trim some coupes and sedans from its lineup here.
The so-called "chicken tax" that that levies a 25-percent tariff on imported trucks dates back to a 1960s trade war between the U.S. and Western Europe that began over taxes on American poultry.