U.S. President Donald Trump on Thursday warned he may soon hike auto tariffs, arguing that could prod automakers to speed 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.”
Automakers have been pressing the White House to reduce the 25% tariffs Trump imposed on autos. The Detroit Three automakers have criticized a deal that would cut tariffs on British car imports but not on Canada or Mexico production.
Trump cited a series of recent investment announcements including GM saying this week that 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 Washington is giving automakers reductions for the value of U.S. content.
Automakers are facing increasing cost pressures stemming from tariffs. In recent weeks, Ford Motor and Subaru of America 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.
