Trump warns auto tariff hike to get more U.S. production

The tariffs have already put immense cost pressures on automakers.

U.S. President Donald Trump has warned that he may soon increase auto tariffs to encourage automakers to accelerate U.S. investments.

"I might go up with that tariff in the not-too-distant future," Trump said at a White House event. "The higher you go, the more likely it is they build a plant here."

Trump cited a series of recent investment announcements from automakers including GM saying this week it plans to invest $4 billion in three U.S. plants and move some SUV production from Mexico. He also noted a $21 billion Hyundai investment announced in March including a new U.S. steel plant.

"They wouldn't have invested 10 cents if we didn't have tariffs, including for manufacturing American steel, which is doing great," Trump said.

Mexico said last month that cars assembled in Mexico and exported to the U.S. will face an average tariff of 15%, not 25% because the U.S. is giving automakers reductions for the value of U.S. content.

The tariffs have already put immense cost pressures on automakers. Ford and Subaru have hiked prices on some models due to higher costs from Trump's tariffs. In May, Ford estimated tariffs would cost it about $1.5 billion in adjusted earnings.

GM said last month it had a current tariff exposure of between $4 billion and $5 billion, including about $2 billion on the more affordable vehicles GM imports from South Korea, where it makes entry-level Chevrolet and Buick models.

Automakers have been after the Trump administration to reduce the 25 percent tariffs imposed on vehicles. The Detroit Three automakers have criticized a deal that cuts tariffs on British car imports but not on Canada or Mexico production.

Source: Reuters