Donald Trump tangled with the auto industry during the presidential campaign, decrying in particular Ford‘s plan to relocate small-car production to Mexico. Ultimately, Trump’s tweet shaming was sound and fury, signifying nothing. US automakers have been building cars in Mexico and Canada for decades, long before borderless free-trade and NAFTA became major campaign issues.
UBS auto analyst Colin Langan published a research note this week in which he assessed the impact of Congress’ corporate tax reform plan — primarily a tax cut and a deal to repatriate offshore cash — and a “border adjustment” proposal that would tax imports to the US, but exclude exports. Langan wrote that the rules would have a large impact on the automakers as imports would face significantly larger taxes than domestic production. However, he claims that GM and Ford are far better positioned than their competitors. Over 95% of F & GM US sales are from N American plants. Within N America, only 21% and 37% of Ford and GM production is in Mexico or Canada. Read more