Add General Motors to the list of American companies that are expressing concern about the impact that trade tariffs could have on their long-term business prospects.
The U.S. automaker warned that an escalating trade war could backfire and lead to “less investment, fewer jobs and lower wages.” GM expressed its concerns in comments that it submitted to the Commerce Department on Friday.
Last month, the Trump administration said it was considering imposing a 25% tariff on imported cars. The administration has indicated that tariffs on autos, steel, and other products are in the interest of national security. Some analysts suggested the car tariffs are intended to pressure Mexico into renegotiating the NAFTA trade pact.
On Monday, Harley-Davidson announced it would move production of its Europe-bound vehicles offshore after the E.U. imposed a 31% tariff on its motorbikes. That same day, the largest nail manufacturer in the U.S. laid off 60 workers and warned it could lay off hundreds more because of a 25% tariff the U.S. had imposed on steel imports.
“It is likely that some of the vehicles that will be hardest hit by tariff-driven price increases — in the thousands of dollars — are often purchased by customers who can least afford to absorb a higher vehicle price point,” GM said in its comments. “The correlation between a decline in vehicle sales in the United States and the negative impact on our workforce here, which, in turn threatens jobs in the supply base and surrounding communities, cannot be ignored.”
In such a situation, GM said, it would either have to raise prices or move its manufacturing facilities. “This could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies and threaten U.S. leadership in the next generation of automotive technology,” GM said.
European automakers such as BMW and Volvo have also submitted comments on the proposed tariffs for autos, but General Motors is the first US car manufacturer to do so.
U.S. stock indexes have grown volatile in response to to rising concerns about global trade war. The S&P 500 Index closed the week down 0.9%, while the NASDAQ Composite declined 1.7%. Stock indexes in China are down more than 20% so far this year.