Trump meets with automakers: more plants, fewer regulations

Sixth-generation Chevrolet Camaro production at Lansing Grand River Plant

Sixth-generation Chevrolet Camaro production at Lansing Grand River Plant

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On only his second business day since moving into the White House, President Donald Trump met for breakfast with the CEOs from each of Detroit’s three automakers—Ford, Fiat Chrysler, and General Motors. 

During the meeting, he outlined two basic desires that could be backed by corporate incentives: a major increase in manufacturing in the U.S. and a loosening of environmental rules and taxation.

The meeting happened on the heels of Trump’s decision to pull out of the Trans Pacific Partnership (TPP) trade agreement worked out during Barack Obama’s tenure. The TPP hadn’t been ratified, but it was not popular with automakers.

“We appreciate the president’s courage to walk away from a bad trade deal,” Ford CEO Mark Fields said. 

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Trump has said that he intends to revamp the North American Free Trade Agreement (NAFTA) that has defined manufacturing in North America over the last two decades. Since NAFTA’s ratification, car prices have gone down (when adjusted for inflation), but automakers have increasingly opened assembly plants in Mexico. Today, those plants seem to be shifting more toward inexpensive car production while American plants build costlier, more complex models in an effort to keep profit margins sustainable.

GM CEO Mary Barra, who is part of an economic policy team initiated by Trump, said that the group had a “very constructive and wide-ranging discussion about how we can work together on policies that support a strong and competitive economy and auto industry, one that supports the environment and safety.”

The President detailed incentives that will be offered to automakers if they build cars in the U.S. Specific details about those incentives have not yet been made public, but they largely revolve around tax credits for building new plants or expanding existing facilities. 

Building additional plants won’t happen overnight, of course. None of the Detroit three of built a new plant on American soil in at least a decade; during that time, many have been shuttered. Nearly every major automaker has announced more investment in plants in the U.S. recently, but the market has leveled out around 14 million new cars sold in the U.S. annually, which has historically been a “normal” rate. 

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More vehicle producing capacity in the U.S. would go underutilized unless automakers shutter plants elsewhere, something that doesn’t seem to be on executives’ minds. 

“I appreciate the President’s focus on making the U.S. a great place to do business,” FCA CEO Sergio Marchionne said in a prepared statement. “We look forward to working with President Trump and members of Congress to strengthen American manufacturing.”

Trump did not meet with executives from foreign brand automakers that also build cars in the U.S., although several have announced recent plant expansions. 

Though most of the news following the meeting centered around increasing manufacturing in the U.S., the discussion did include some mention of dialing back what Trump deemed are “unnecessary regulations” regarding vehicle emissions. 

Saying, “I am, to a large extent, an environmentalist,” Trump suggested that certain emissions and fuel economy standards are “out of control.”

It’s not clear how the Trump administration will utilize the EPA to lift or modify environmental standards for new cars. 

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