By on January 24, 2017

White House, Washington DC

At the start of the second real workday of the Trump administration, the leaders of the Detroit Three automakers marched into the White House for a breakfast meeting with their newly minted president.

We don’t know for sure what they ate, but we can relate what they talked about. This won’t come as a shock: investment. Specifically, assembly plant investment in the U.S., rather than Mexico.

Ford CEO Mark Fields, General Motors CEO Mary Barra and Fiat Chrysler Automobiles CEO Sergio Marchionne knew the landscape they were entering. Yesterday, Trump signed an executive order that pulled the U.S. out of the Trans-Pacific Partnership and moved to renegotiate the North American Free Trade Agreement. Today, he signed an executive action to advance approval of the Keystone XL and Dakota Access pipelines.

Deals. Besides perhaps eggs and toast, Trump wanted deals. Or, at this early point, promises and assurances at the very least.

Speaking of toast, Trump did some of the buttering yesterday. On Monday, he signaled his intention to reduce corporate tax rates to somewhere between 15 and 20 percent, and pledged a 75 percent reduction in the regulations affecting companies.

“We want regulations, but we want regulations that mean something,” Trump reportedly told the assembled breakfast guests.

While he wasn’t specific, his remarks could indicate a looming change in fuel economy standards — something automakers have demanded for years. The Environmental Protection Agency firmed up the industry’s 2025 gas mileage rules in the final days of the Obama administration.

“I am, to a large extent, an environmentalist,” Trump told the three. “I believe in it. But, it’s out of control.”

All three automakers made post-election overtures to Trump, who campaigned on returning jobs lost to cheap Mexican manufacturing to American soil. Ford scrapped a Mexican small car plant and invested in Michigan, while GM and FCA handed out their own U.S. checks. (Those investments were, for the most part, contained in long-term plans.)

“We have a very big push on to have auto plants, and other plants,” Trump told the executives. “We’re going to make the process much more simple for the oil companies and everybody else that wants to do business in the United States.”

Fields, a vocal opponent of TPP, sounded the most cheerful when leaving the hour-long meeting. The CEO said his company and the auto industry wanted to work with Trump to  “really create a renaissance in American manufacturing.” Barra said she sees a “huge opportunity” in working with the president to “improve the environment, improve safety and improve job creation.”

Bringing up the rear of the enthusiasm train, Marchionne said the meeting was a positive one.

Trump made a point of claiming that the automakers weren’t being singled out for special treatment. The administration’s future policies target all industries, he claimed.

So, plenty of talk, but precious little information. Meanwhile, the country that has seen its industrial base grow exponentially with the help of foreign automakers is getting nervous. Mexico hosts a slew of assembly plants from various automakers, but a renegotiated NAFTA could see it lose its edge. The country wants to keep the same terms or it will pull out of the agreement.

“There could be no other option. Go for something that is less than what we already have? It would not make sense to stay,” Mexican Economy Secretary Ildefonso Guajardo said today.

If Trump keeps his pre- and post-election promises, Mexico will certainly face increased tariffs on exported vehicles as a price for staying in NAFTA. If Mexico balks at the idea (and it just did), the agreement could end up scrapped. Bilateral talks between the U.S., Canada and Mexico would then fill the void.

[Sources: Bloomberg, Detroit Free Press, CNBC] [Image: Ad Meskens/Wikimedia Commons (CC BY-SA 3.0)]

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68 Comments on “The Big Three Go to Washington: Breakfast Ensues, while Mexico Stews...”


  • avatar
    incautious

    Its about time we get some one with Balls in the white house.

    • 0 avatar
      FreedMike

      Balls, he’s got.

      I just wish he had a little less obvious narcissism.

    • 0 avatar
      DeadWeight

      There’s approximately a snowball’s chance in hell that

      a) the corporate tax rate is reduced to 15% (or 20%)

      or

      b) There’s a cut of regulations anywhere close to 75% (12% MIGHT be do-able)

      I say this as one who is truly independent, despising both “different” political parties (and their Establishment Wings, that pretty much divide the voters on social wedge issues that the courts actually usually decide, while they do the bidding of the same banks, multinational corporations, etc.) equally.

      I’m all for stripping out idiotic regulations, and even cutting the corporate tax rate, but anyone who thinks that Trump will cut anywhere near 25% (let alone 75%) of existing regs, or that he’ll be able to cut corporate tax rates to 15% or 25% without sending the budget into a full-blown crisis (it’s simple math), is INCREDIBLY NAIVE.

      The average person who believes Trump can “disappear” 75% of existing regulations without huge adverse impacts on Americans’ standard of living (clean water, air, etc. for starters),mis a MORON.

      This is what Trump does; he just makes up bull$hit, and why wouldn’t he, as long as enough voters, citizens, rubes believe it.

      He’s at the stage now where he’s reinforcing the absolutely undeliverable set of campaign promises he made, and digging himself a deeper hole when hardly any of these things manifest themselves (pulling out of TPP was a done deal, and renegotiating NAFTA could mean anything; the art of semantics).

      Now Trump’s biggest groupies shall descend upon me, and call me bad names, and tell me to GO BACK TO RUSSIA!, and chastise me for not just simply believing in tax cuts for EVERYONE, AND SHRINKING GOVERNMENT, AND ENDING BAD REGULATIONS, AND PUPPIES AND RAINBOWS AND ICE CREAM AND BOOTS UP ASSES RAWWWWW MAWWWWWW AMERICAN EAGLE DESSCENDS UPON EVIL ANTI-AMERICAN TARGET AND RIPS IT TO SHREDS!!!!

      EMPEROR TRUMPIGULA!!!

      ART OF BEING BILLIONS IN DEBT TO BANK OF CHINA! BLOW UP NATIONAL DEBT MOOAAAR!!!

      • 0 avatar
        PrincipalDan

        A year from now he’ll tell us that he was “75% successful in getting the regulations changed/eliminated that his administration went after.”

      • 0 avatar
        Yesac13

        Here’s a clue:

        Take Trump seriously but not literally.

        Too many take him literally but not seriously… Don’t. That way, you underestimate Trump. Don’t. The Democrats took him literally but not seriously and look where they are now.

        It’s too early to call Trump a fool. Let’s wait and see.

        P.S. – if you read a bit about deals – Trump likes to do outrageous then tone it down – ends up at a better place instead of starting too reasonable then get chiseled to something that ends up minimal.

        • 0 avatar
          30-mile fetch

          “Take Trump seriously but not literally.

          Too many take him literally but not seriously”

          I’ve heard this exact analysis from a journalist examining the election and there is probably a lot to it. In that context, he is fascinating to watch and it will be interesting to see how that strategy pans out.

          • 0 avatar

            This kind of action just drives the nails into the coffin for the Democrat party.

            Automakers love Trump. That’s news.

            The bigger news is the budding love affair between auto unions and the new Administration. The positive talk coming from the unions is nothing short of amazing.

            For my entire lifetime, the unions have aligned themselves with the Democrat party. It now looks like they may flip their allegiance. If so, it’s truly the end of the party.

          • 0 avatar
            DeadWeight

            “Automakers love Trump. That’s news.”

            No they don’t. They’re hedging everything b/c they honestly have no idea what is on the horizon, but they will mount a concerted front against Trump (as will other global-oriented businesses) if they see damaging and lasting policy proposals by a Trump Administration. Don’t let auto exec smiles and amorphous statements on day 5 of Trump’s presidency fool you. They want to play nice, allow the Trump some Twitter/talking points (even if not factually true), and see what happens.

            “The bigger news is the budding love affair between auto unions and the new Administration. The positive talk coming from the unions is nothing short of amazing.”

            No it isn’t because it’s not reality as you described it. . The union leaders are also hedging everything b/c they honestly have no idea what is on the horizon. Don’t let union leader smiles and amorphous statements on day 5 of Trump’s presidency fool you. They want to play nice, allow the Trump some Twitter/talking points (even if not factually true), and see what happens.

            “For my entire lifetime, the unions have aligned themselves with the Democrat party. It now looks like they may flip their allegiance. If so, it’s truly the end of the party.”

            To say that your statement is extraordinarily premature, massively naive, incredibly hyperbolic nonsense would be too kind.

          • 0 avatar
            JimZ

            “Automakers love Trump.”

            HAHAHAHAHAHAHAHA what orifice did you extract that from?

        • 0 avatar
          Grenade

          I think this is exactly right, and a great observation.

        • 0 avatar
          VoGo

          In actual fact, Trump received $200M from his father. If he had invested that money in the stock market, he would have $8B today. Instead, Trump CLAIMS to be worth $3B, although he offers no proof.

          THAT is the quality of investor/”businessman” Trump is.

        • 0 avatar
          King of Eldorado

          Yesac13: The problem with “take him seriously but not literally” is that it doesn’t work at the presidential level where, like it or not, “literally” becomes important as a matter of trust. Consider how much flak Obama took over his “You can keep your doctor” promise for the ACA. The vast majority of people who kept their current plan or took the time to research whether their potential new plan included their doctor were happy, but those who bought their existing plan off the back of a matchbook were likely to be disappointed. That is, people expected the statement to be literally true, and screeched about it for the next several years when it turned out there were exceptions. Same with Obama’s Syrian “red line”: even though his more diplomatic approach resolved the specific issue relatively painlessly, people expected him to rain holy hellfire on Syria immediately, and gave him endless grief for not doing so.

      • 0 avatar
        TOTitan

        DW I agree with you completely. It still makes me crazy that seemingly smart people, like the Baruth brothers for example, support Trump when it is blatantly obvious to anybody with functioning grey matter that Trump just makes up bullshit as he goes along. Facts are something he pulls out of his ass, and by his own admission he doesnt even f***ing read. The thing that scares me the most is that this unread imbecile has the potential to tank the whole worlds economy. I am going to protect my family as much as possible by basically checking out. I bought ten acres in CO, Im selling my home in CA, and will use the proceeds to build a new home so that by the end of the year I will be completely debt free. I hate to be pessimistic and stop working ahead of schedule but for now it is pragmatic to do so.

      • 0 avatar
        ect

        Trump has written a lot of cheques he can’t cash. This is one of them.

        The present reality is that most businesses don’t pay the 35% rate. Small businesses are organized either as S-corporations or LLCs, so aren’t subject to corporate tax. Large companies have purchased specific loopholes from Congress, so they’re often paying either single digits or no tax at all. I suppose it’s the mid-size companies that get stuck with the full rate.

        To reduce the general rate to 15-20%, many of the special-interest reductions/exemptions/credits would have to be eliminated. I can’t see this happening unless those in Congress suddenly commit to refusing money from special interests. I’m not holding my breath.

        So far, Trump is committed to increasing military spending, increasing infrastructure spending, leaving Medicare/Medicaid and Social Security untouched, reducing income taxes and balancing the budget. Riiiight….

        • 0 avatar
          ect

          Down boy, it’s a figure of speech, well known to people with an education – refers to someone making promises he hasn’t the authority and/or ability to fulfill.

          Trump has pledged to do a lot of things that cannot be accomplished without congressional approval. Given that the Dems have 49 Senate seats, there is no guarantee of this on much of anything.

          In addition, he has made contradictory promises, which goes to the last paragraph of my post.

          Having said that, Trump does seem to have a history of stiffing suppliers, which a simple Google brings up. His new hotel in DC presently has more than $5 million in liens that have been filed by trades who haven’t been paid for their work.

      • 0 avatar
        DeadWeight

        You offer not a single, constructive, substantive comment in support of your ostensible belief that Trump can deliver on his campaign promises in any significant way.

        You react with amateurish and juvenile rage and insult people in petty ways, who dare question the claims that your apparent cult-leader, Donald Trump, has repeatedly made.

        You are a reactionary, substance-less, devoid-of-rational-thought, archetypical supporter of a cult of personality.

      • 0 avatar
        dantes_inferno

        >Now Trump’s biggest groupies shall descend upon me, and call me bad names, and tell me to GO BACK TO RUSSIA!

        Trump can keep his groupies. I’ll take the Russian groupies instead…

      • 0 avatar
        King of Eldorado

        You pretty much nailed it, DW, especially as to Trump’s ridiculous claim that he can cut 75% of regulations. It’s also worth noting that the net result of cutting the corporate tax rate depends not only on the nominal rate but also on what “loopholes,” a/k/a longstanding commonly accepted deductions and credits that are perfectly legal and arguably desirable, are closed along with reducing the nominal rate. Most corporations actually pay much less than the nominal rate. Lowering the rate without closing a lot of “loopholes” would be a revenue disaster.

    • 0 avatar
      01 Deville

      We do have one, but with overly demanding balls.

  • avatar
    Big Al From 'Murica

    Just wanted to tell everyone to have a wonderful day before this thread goes down the crapper with respect to civility.

  • avatar
    nrcote

    Big Al, I believe you were too late by a short three minutes.

  • avatar
    PrincipalDan

    Well this does remind me of the gun control debate during the Clinton years where the Republicans asked: “Are you enforcing the regulations you already have?” (ie: Do you need a NEW regulation if you aren’t enforcing what already exists?)

    I’m always for examining what the policies/procedures/regulations are and trying to decide where there’s duplication of effort or a proposed new regulation that addresses something that was supposed to be addressed by a previous regulation.

    • 0 avatar
      Chocolatedeath

      Its my belief that the gun control policies at that time were probably less enforced than the ones on autos..Dont know for sure but just a guess.

    • 0 avatar
      FreedMike

      With something like 300 million guns in circulation, I don’t think it’s even possible to regulate them. There’s no way. And I believe that was by design, on the part of the gun manufacturers, and their lobbyists. Flood the market with them, and then argue that regulations don’t work.

      They’re right…cynical, but right.

      • 0 avatar
        mtmmo

        Obama was the best gun salesman ever. That’s why all the gun manufacturers love him. He ignored Chicago yet kept pushing the topic of guns. Rumor is his ‘blind’ trust made him millions through the gun stocks it held. Just like Senator Franken did with tabacco stocks. Claim publicly you’re against guns & cigs while making money off those very investments.

        • 0 avatar
          FreedMike

          “Obama was the best gun salesman ever.”

          Considering that the “sales job” was a bunch of regulations that never really came to fruition, which prompted millions of gun owners to buy more of them out for no rational reason (misplaced anger, paranoia, raised-middle-finger, take your pick), I think your slap at Obama actually slapped someone else.

          • 0 avatar
            Higheriq

            I see neither a slap at Obumble, nor anyone else. Just a stated fact.

          • 0 avatar
            FreedMike

            Oh, there was a slap – he was blaming Obama for a problem he didn’t actually cause.

            Ask yourself why Obama’s proposed regulations didn’t get anywhere. You’ll find “we can’t enforce the laws we already have” was commonly used as a reason. And that’s true. Of course, the reason we can’t regulate the guns we have is in large part due to the fact that there are 300 million of them in circulation. You might as well try to regulate Polo shirts, or portable radios, or toaster ovens.

            So, buying more just means the problem of unregulated guns gets worse, not better. After all, no one’s building guns on the black market for criminal consumption – every gun that ends up in their hands was almost certainly originally manufactured and bought legally. Somewhere down the line, though, those legal weapons ended up in the hands of criminals. So people buy more, because they’re afraid of “the crime problem”.

            And then manufacturers then use this, plus misplaced paranoia and/or political anger, to sell even more guns, as the original poster stated.

            Rather clever marketing strategy on someone’s part, if you ask me.

        • 0 avatar
          highdesertcat

          “Obama was the best gun salesman ever.”

          That is soooooooooo true. I sold all the guns I wanted to sell, in record time, for at least five times what I paid for them.

          Now that is a return on investment!

  • avatar
    SCE to AUX

    It will be fascinating to see how corporate cost-cutting culture changes in response to the “America First” agenda.

    As a design engineer, I’ve seen a massive push to outsource components, assemblies, and design work (yes, my job) to low-cost countries over the last 15 years. It’s just become reflexive to do this. (Curiously, management is *never* outsourced, and the American jobs which are saved are never the lower-level positions.)

    I think mfrs are going to have to begin justifying why they’re outsourcing something, looking at the bigger pictures of quality, public relations, and intellectual property protection. Big outsourcers may even find it difficult to hire good talent if candidates are “America Firsters.”

    • 0 avatar
      FormerFF

      I really think that most senior managers have no idea how much additional effort goes into outsourcing something. I’m in IT, and when management makes these decisions they almost always significantly underestimate how much time and effort goes into shipping the work off to someone else, even if it’s just to the other side of town, let alone the other side of the world. Then they wonder why the promised cost savings don’t materialize and why their professional staff can’t make the progress on new initiatives that they previously could.

    • 0 avatar
      Yesac13

      Outsourcing = more moolah for management. That has gone on too long and is now killing the golden goose.

      Less money in the economy means a crappier economy. Management doesn’t care because of… The Iron Law of Institutions. Look it up.

      The times are a-changing. Hopefully for the better. It really was very, very stupid to outsource so much. There’s this thing called “Institutional Knowledge” – it is very valuable and when you outsource everything, the people left behind stagnates and when they do die, their knowledge is lost forever. You yourself is an example of institutional knowledge – if nobody replaces you, your knowledge is flushed down the drain. People who feel/are useful tend to make things better all around so constantly outsourcing and expecting people left behind to keep buying… stupid. Just stupid.

    • 0 avatar
      pdieten

      Well, the justification is that public companies are under constant pressure to increase profits by cutting costs, and private competitors have to follow or find themselves uncompetitive in the market. I’m not convinced that public company management always wants to cut costs the way its large institutional investors demand.

      I wonder if the effect of lower corporate profits (with lower stock prices following) will manifest in the next four years, and if it does, whether investment money will start flowing out of the country looking for higher returns elsewhere. Great, now I have to decide if I should rebalance my IRA to put more into international funds…..

  • avatar
    Master Baiter

    It’s nice to see adults back in charge.
    .
    .

    • 0 avatar
      VoGo

      Sneaky way to call the former president ‘boy’

      • 0 avatar
        CaddyDaddy

        As always, VOGOES right to the race card. The last shout of all failed arguments in a progressives’ bag of tricks. I love saying “President Trump” it sounds really nice!

        As far as the UAW and the other private sector unions are concerned, of course their leadership is playing nice, they have to step in line before their membership ties them up on a lamp post. The dems are freaked out, as their private sector union ATM is about to be out of order.

    • 0 avatar
      JimZ

      I’m sorry, who is the adult here? Because the thin-skinned Orange Bezoar acts like a spoiled 14-year-old brat.

    • 0 avatar

      No we now have a return to rule of man vs rule of law. Many politicians are ineffectual because they believe in do process and all the roadblocks to progress in government. These protections are there for a reason. Where as Trump is rule of man ” I’m pretty smart I know whats best for you”. Mind you he’s not the first to head in this direction he just seems willing to go much further down it.

  • avatar
    stingray65

    The average American commits 5 felonies per day, and given that the vast majority of citizens are peace loving and civil, this would suggest there are a lot of laws/regulations that could be repealed without issue. If a law can’t be fairly and evenly enforced without great cost – get rid of it. If a law isn’t having the desired effect – get rid of it. If a law addresses some obsolete issue that is no longer a relevant issue – get rid of it. If a law substantially duplicates another law – get rid of it. If a law is primarily used to unlawfully raise revenue (i.e. not a legally passed tax) – get rid of it. If these simple tests are used, I have no doubt that 75% of current regulations could be eliminated and about 75% of government agencies as well.

    • 0 avatar
      Von

      Any sources or examples about that 5 felonies a day stat? It’s interesting and I honestly can’t think of good examples other than throwing away someone else’s letters…which, uh, I only saw some neighbors do and I have NEVER done.

      • 0 avatar
        stingray65

        My mistake – it is only 3 felonies per day – read the book.

        https://www.amazon.com/Three-Felonies-Day-Target-Innocent-ebook/dp/B00505UZ4G/ref=sr_1_1?ie=UTF8&qid=1415141894&sr=8-1&keywords=three+felonies+a+day#customerReviews

    • 0 avatar
      stingray65

      I couldn’t disagree more with the 2016 presidential loser. The fact that it is easy for an ordinary citizen to regularly break felony laws is an indication that most of our lawmakers are a basket of deplorables. I dearly wish we could change the name and aim of lawmakers to lawrescinders, so that most of their effort was put into getting rid of bad/obsolete laws and regulations.

  • avatar
    FormerFF

    So why just these three automakers, and why Mexico? Is Trump going to demand that the three US sourced automakers behave differently than Nissan, Honda, Toyota, and Hyundai? What percent of our trade deficit is automotive, and why is Trump focusing on the auto industry?

    Also, since 40 percent of our trade deficit is with China, and it’s six times as large as the deficit is with Mexico, why is Trump so interested in Mexican trade? The US has a larger trade deficit with Germany and Japan that it does with Mexico, while Mexico is a much better customer than either Germany or Japan.

    This sounds much more like scapegoating than an actual solution.

    • 0 avatar
      FreedMike

      And notice none of this ire is pointed at Canada, even though it’s part of NAFTA and builds a lot of American-branded vehicles.

      Not to difficult to figure out the difference between Canada and Mexico, and it ain’t ice hockey.

    • 0 avatar
      DeadWeight

      It’s all pure theater.

      Trump is making some initial proposed overtures to the execs, on a tacit agreement that they’ll commend his “leadership” and that they “are encouraged by his agenda” and “look forward to working with him.”

    • 0 avatar
      highdesertcat

      “Is Trump going to demand that the three US sourced automakers behave differently than Nissan, Honda, Toyota, and Hyundai? ”

      I believe that Trump has more control over Ford, GM and Fiatsler than the others. A number of reasons for this. But he did already tangle with Mercedes-Benz and BMW.

      Turns out Trump is a union man. Who knew?

      I didn’t vote for Trump, but I did vote.

      I believe that the UAW and other unions, along with bad economic and bad tax policy, drove employers out of the US and into Mexico.

      But with Trump vowing to create more jobs in the US of A, sending the unions into seed-splattering orgasms, there goes my hope of more automakers picking up their toys and moving their factories to Mexico.

      Border tax, don’t you know?

      Canada isn’t out of the woods either. Maybe these three automakers will decide to move production out of Canada and back to the US to create more jobs in the US.

      Stranger things have happened.

  • avatar
    doublechili

    How long have politicians been talking about cutting regs and they just keep expanding? If Trump says he’s going to cut regs by 75% and in reality the existing ones are cut by 20% and the expansion of new regs is reduced more dramatically….

    I assume when he developed properties his initial proposals were for much more than he “needed” for profitability. The government officials on the other side of the table cut him down, and in the end he walked away smiling.

  • avatar
    dusterdude

    Hi Freed Mike.. just a couple of many reasons Canada isn’t mentioned in a significant way. (1) Canada is #1 export market for 35 states (2) Canadians buy a lot more “Detroit Three ” cars than they make..

  • avatar
    JEFFSHADOW

    Let’s see how tough he really is. . .
    Hey, Trump, tell GM to bring back OLDSMOBILE: 99.9% made in the USA since 1897! A few 1990 to 1993 Cutlass Cieras made in Canada, daz all!

  • avatar
    Whatnext

    Not to mention that Canada pays roughly the same wages and follows similar environmental and labour regulations as the USA, which Mexico does not. Currently Canada-USA trade is pretty much in balance which cannot be said for Mexico (or China).

  • avatar
    Matt Foley

    Good thing we got rid of Bark M. so we won’t have these pesky political discussions anymore!

  • avatar
    Tstag

    As long a Trump picks his fight with Mexico it will only really hurt Mexico. If he goes all protectionist with China, say hello 1930’s depression….

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