The Trump Effect: Will More Car Production Stay in America?

For all the controversy President-elect Trump has created, his impending presidency seems to be having at least one immediate effect: Car production is staying in the United States.

In the last few weeks, Ford has cancelled plans for a Mexican production plant, and GM has committed to invest a billion dollars in U.S. manufacturing while adding 7,000 jobs. That news comes after Trump has publicly derided the companies for moving production out of the country.

German automakers, however, have stood firm on their existing plans for production in Mexico, even in the face of Trump’s proposed 35 percent tax on foreign cars being brought into the U.S.

Is this truly a Trump effect, or just coincidence?

The Columbus Dispatch says,

Ford is canceling plans to build a new $1.6 billion factory in Mexico and will invest $700 million in a Michigan plant to build new electric and autonomous vehicles.

Ford, however, still plans to shift production of the Focus small car to Mexico and will make the car at an existing plant. President-elect Donald Trump has been pressuring Ford to keep production of the Focus in the U.S.

In addition to Ford, Trump has also called out GM for producing vehicles in Mexico and has suggested they will pay a “big border tax” for shipping Mexican-made vehicles to the United States. Perhaps coincidentally, on Tuesday GM said it will add 7,000 U.S. jobs in the next few years and invest $1 billion in U.S. plants.

On January 8, Fiat Chrysler said it would invest $1 billion in plants in Michigan and Ohio, adding 2,000 jobs to produce new Jeep vehicles. Toyota plans to invest $10 billion in the U.S. in the next five years and Hyundai/Kia have plans to invest $3 billion in the U.S. in the next five years, in addition to possibly building a new plant here.

That’s a lot of investment, all announced at about the same time, to be considered a coincidence. No one, though, is admitting the decisions are in any way influenced by the soon-to-be president.

Not all automakers are happily throwing money into the U.S.

In spite of the threats of a 35 percent tax, BMW is standing by its decision to build a new $1 billion factory in Mexico. Volkswagen and Mercedes-Benz also build cars there for sale in the U.S. with no plans to cease doing so.

The evidence so far says that Trump’s big talk is having an effect, but the Germans appear to be calling his bluff. Where things go from here is anyone’s guess.

Do you think automakers should pay a hefty tax to import cars from Mexico?


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