GM wants comprehensive tax reform from Trump

Brent Snavely
Detroit Free Press
President Trump meets with business leaders on an advisory council, including Blackstone Group CEO Stephen Schwarzman and General Motors CEO Mary Barra, on Feb. 3 at the White House.

DETROIT -- General Motors executives say the automaker wants to work on a comprehensive tax reform proposal with President Donald Trump and his administration as the automaker grapples with border tax proposals that could hurt its profits.

Both GM CEO Mary Barra and GM Chief Financial Officer Chuck Stevens said the automaker has shared information about the automotive industry and job creation ideas with the White House.

"We are supportive of efforts by President Trump and Congress to implement tax reform that improves the competitiveness of American companies," Stevens told Wall Street analysts after the company released year-end earnings. "GM continues to share job creation ideas and industry information with lawmakers to help them create ideas that will be positive for the U.S. economy and keep vehicles affordable."

While the White House did not respond to an e-mail about GM's comments, Trump has met with Barra, other automotive executives and manufacturing executives in recent days.

He made renegotiating the North American Free Trade Agreement (NAFTA) a centerpiece of his campaign and a top priority now that he is in office.

Trump wants a new deal that benefits the U.S. more than the existing deal and has threatened to impose a steep border tax ranging from 20% to 35% if Mexico is unwilling to agree to a new deal. The president has said he wants to reduce corporate taxes in the U.S., an idea that automakers have embraced as a way of potentially offsetting a border tax.

"We will make great trade deals and we will have something that will, I don’t care if it’s a renovation of NAFTA, or brand new NAFTA, but we do have to make it fair, and it’s very unfair to the American worker and very, very unfair to companies that do business in this country," Trump said  Thursday.  "That’s why they are leaving — one of the many reasons. It is also (because) the taxes are too high, and we are going to take care of that also."

When NAFTA took effect in 1994, the U.S. boasted 16.8 million manufacturing jobs. As of July, there were 12.3 million. That’s down 27%, though the number has risen since bottoming out at 11.5 million in March 2011. Trump has vowed to reverse the trend even though experts say it is unlikely that U.S. manufacturing jobs will rebound substantially even if NAFTA is renegotiated.

Morgan Stanley analyst Adam Jonas said in a recent report that GM is vulnerable to Trump's trade proposals because of its presence in Mexico and joint ventures in China. About 50% of GM's light-duty pickups are made at a plant in Silao, Mexico, Jonas said.