Chrysler's New CEO Has Dinner Date With Trump With Trade on Menu

(Bloomberg) -- Fiat Chrysler Automobiles NV has won tweets of praise from President Trump for its decision to shift pickup production from Mexico to Michigan. Now new Chief Executive Officer Mike Manley must try to parlay that goodwill into a change in the president’s trade policy.

Manley, thrust into the CEO post two weeks ago with the unexpected death of Sergio Marchionne, joins more than a dozen other top executives meeting Trump today as the president shapes his economic message going into the midterms. The 54-year-old Briton will have to try and maintain the warm rapport established by his predecessor, who died July 25 after a surgery.

Fiat Chrysler ingratiated itself to the president in January by allowing him to take credit for its plan to shift production of its heavy-duty Ram pickups from Saltillo, Mexico, to Warren, Michigan. It’s investing $1 billion to retool a plant in the battleground state, creating 2,500 new jobs. Trump has cited the move at least eight times this year in rallies, speeches and interviews, though the shift won’t actually happen until 2020 and was planned before Trump was elected.

“I would expect that the discussions around the table itself will be rather generic, ‘We want an opportunity to grow, we appreciate the tax cuts, we need to have regulations and trade in a predictable fashion,’ ” said Alan Baum, an auto analyst in West Bloomfield, Michigan. “Then on the side of the room you’re saying, ‘We import vehicles from Europe; that’s a major part of our business plan, please take that into consideration.’ ”

The Italian-American carmaker declined to comment on what Manley plans to discuss at tonight’s dinner at Trump’s golf resort in Bedminster, New Jersey.

Manley will attend the event along with executives from companies including PepsiCo Inc., Boeing Co. and FedEx Corp. The president will be joined by aides including daughter Ivanka Trump and son-in-law Jared Kushner; Larry Kudlow, his top economic adviser; and deputy chief of staff for policy coordination Chris Liddell.

Fiat Chrysler Imports

Automakers have been loudly and publicly lobbying against the Trump administration’s consideration of a tariff on imported cars, warning it would trigger retaliation from other countries, depress sales, and force them to lay off workers. America’s trade in cars and car parts with the rest of the world amounted to more than $470 billion last year, with passenger-car imports outpacing exports by about $135 billion.

Fiat Chrysler imports its Jeep Renegade from Italy, the Jeep Compass and Dodge Journey from Mexico, and several Dodge and Chrysler models, including the Chrysler Pacifica minivan, from Canada.

The U.S. Commerce Department started conducting an investigation in late May into whether imported cars are a national security threat at the behest of Trump, whose administration is said to be considering tariffs of as much as 25 percent. Trump ordered the probe under Section 232 of the Trade Expansion Act of 1962, the same power he used to impose global tariffs on imported steel and aluminum earlier this year.

Carmakers including General Motors Co. and Toyota Motor Corp. contributed to more than 2,300 comments submitted to the Commerce Department ahead of hearings on the tariffs last month. An auto trade war would deal a body blow to automakers, who have fine-tuned their supply chains to take advantage of countries with low duties, such as the U.S.

Trump has so far shown little willingness to back away from the idea of an import car tariff. “Tariffs are working big time,” he tweeted Aug. 5.

A full pass-through of a 25 percent tariff would force Fiat Chrysler to raise prices by $1,284 a vehicle, or 3.8 percent, according to an analysis of domestic vehicle content by Baum & Associates. That would result in a loss of 91,803 units, or about 4 percent of last year’s U.S. sales.

Carmakers have also cautioned against the Trump administration’s move to revoke California’s authority to set emissions rules more stringent than federal ones, urging the two parties to reach a consensus on national fuel economy standards.

According to a list obtained by Bloomberg News, Trump’s guests also include:

  • Johnson & Johnson Chairman and Chief Executive Officer Alex Gorsky
  • Continental Resources Inc. Chairman and CEO Harold Hamm
  • FedEx Corp. Chairman and CEO Fred Smith
  • Boeing Co. Chairman, President and CEO Dennis Muilenburg
  • Honeywell International Inc. Chairman, President and CEO Darius Adamczyk
  • Boston Beer Co. Inc. Chairman Jim Koch
  • Ernst & Young Chairman and CEO Mark Weinberger
  • Mastercard Inc. President and CEO Ajay Banga
  • International Paper Co. Chairman and CEO Mark Sutton
  • Red Apple Group Chairman, President and CEO John Catsimatidis
  • Richard LeFrak, a real estate tycoon who is an informal adviser to Trump

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