Carmakers use Detroit Auto Show to talk up ‘Made in USA’ amid Trump’s tweetstorms – CNBC
For example, FCA, the U.S. arm of automaker Fiat Chrysler, announced on Sunday that it would invest $1 billion in plants in Michigan and Ohio, which will add 2,000 new jobs in the U.S. The company said it was the second phase of a plan it first made public a year ago.
Fiat Chrysler CEO Sergio Marchionne said Monday the decision to announce the U.S. investments was “coincidental” to Trump’s tweets, according to Reuters.
Additionally, the allure of making cars in Mexico isn’t about to go away anytime soon.
Karl Brauer, senior director for automotive industry insights at Kelley Blue Book, told CNBC’s “Squawk Box” on Tuesday that Mexico’s trade agreements were a key attraction.
“You can build a vehicle in Mexico and you’ve got really good trade agreements with a wide portion of the globe,” he said, adding that the U.S. needed better deals for markets “across the oceans,” and not just with neighbors Canada and Mexico.
Brauer also noted that even with Trump’s threatening language for the industry, automakers were likely to keep some production south of the border.
“As a car company, you have to be smart about which cars you build where,” he said. “If you can build some of these small, low-priced cars where the labor is cheaper, you can still build the big ones here and make money and both products are profitable.”
To be sure, while Trump has focused on whether cars were made in Mexico, the U.S.’s biggest automotive import from Mexico isn’t cars — it’s vehicle parts.
Under the free-trade deal NAFTA, the automotive industry increasingly became intertwined between the U.S., Canada and Mexico, resulting in an auto parts manufacturing boom south of the border.
The impact of that is clear in U.S. trade data. For instance, in the 10 months ended in October 2016, automotive vehicle and parts imports from Mexico totaled $89.6 billion, dwarfing the next biggest import nations, Canada with $54 billion and Japan, at $44 billion.
While vehicles were the main imports from Canada and Japan, more than half — $46.8 billion of the automotive-related imports from Mexico — were vehicle parts in that 10-month period. U.S. government data show that car parts imports into the U.S. nearly doubled in the past five years.
—Patti Domm, Javier E. David and Berkeley Lovelace Jr. contributed to this article.
—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1