Trump Tells Automakers He Wants Them to Build More Cars in U.S.

(Bloomberg) -- President Donald Trump told top auto executives at a meeting in the White House that he wants them to build “millions more cars” in the U.S.

“We have at this table the biggest car manufacturers in the world,” Trump said as the meeting got underway Friday. “We’re working on how to build more cars in the United States.”

Top executives of General Motors Co., Honda Motor Co., Ford Motor Co., Fiat Chrysler Automobiles NV and other companies came to discuss trade and environmental standards enacted by the Obama administration.

Before reporters were ushered out, Trump asked the group to go around the table and introduce themselves and explained that they would be discussing environmental regulations such as auto efficiency standards and trade -- especially the North American Free Trade Agreement currently under renegotiation.

“I’ve never been a Nafta fan,” Trump said.

The automakers went into the meeting hoping to persuade Trump to cooperate with Jerry Brown, the Democratic governor of California, who invoked biblical references when calling the Trump administration’s proposal to roll back auto efficiency regulations “profoundly dangerous.”

They wanted to emphasize their support for easing the Obama-era standards, but not so much that it triggers a conflict with California and results in a split market of environmental regulations set by Washington and Sacramento.

“We are not asking the administration for a rollback,” Ford Chairman Bill Ford said Thursday during the automaker’s annual meeting. “We want California at the table and we want one national standard.”

In attendance were representatives of the world’s biggest carmakers, including GM CEO Mary Barra, Ford CEO James Hackett, Fiat Chrysler CEO Sergio Marchionne, and Rick Schostek, executive vice president of Honda North America Inc. The meeting also included Transportation Secretary Elaine Chao, Environmental Protection Agency Administrator Scott Pruitt, U.S. Trade Representative Robert Lighthizer and economic adviser Larry Kudlow.

The White House said in advance that the president looked forward to a productive discussion with the automobile executives.

“The President will hear from the automaker CEOs about the impact of the rulemaking on the auto industry and their efforts to negotiate a ‘National Program’ with the state of California,” Lindsay Walters, White House deputy press secretary, said in a statement.

The meeting comes against a background of occasionally bumpy relations between Trump and an industry that he championed on the campaign trail.

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As a candidate, he repeatedly attacked Ford over its decision to build an automobile plant in Mexico. Three days before Trump’s inauguration, Ford announced that it would abandon the plant -- even though construction was underway. The president-elect responded with tweets of praise.

Trump aimed more attacks at GM and Toyota over manufacturing plans for Mexico, and both responded by announcing billions of dollars in already planned investments in American plants.

Automakers, parts suppliers and dealers have been wary about the administration’s renegotiation of the North American Free Trade Agreement, warning that higher local content requirements could be unworkable and raise vehicle prices.

“Their hand is a bit stronger than perhaps the administration realizes,” Adam Jonas, an auto analyst at Morgan Stanley, said Friday on Bloomberg Television. “Those 10 CEOs might represent the better part of 1 million jobs in the United States and indirectly supporting many, many millions more, particularly in states that supported the administration, such as Michigan.”

Jones said the automakers definitely want one standard. “And they don’t want this going to the Supreme Court and being dragged out in the media and somehow be in the public, affiliated with a kind of hostility toward the world’s fifth-largest economy, California,” he said.

Trump trade-related tirades also have been a routine issue for the likes of Volkswagen AG, Daimler AG and BMW AG, with Trump blasting Europe’s auto trade imbalance with the U.S. and threatening to tax German car imports.

The Friday morning summit is a key milestone in the industry’s effort to win relief from the rules, a campaign that began in the first days of Trump’s presidency. Carmakers and their Washington trade groups lobbied the administration to reconsider mileage standards locked in by the Environmental Protection Agency during the final days of Barack Obama’s presidency.

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Trump granted automakers their wish in March 2017 while laying out an explicit quid pro quo: a promise to cut them a break on environmental regulations in exchange for more hiring in the U.S. Within days, two of the industry’s major trade groups published a full-page newspaper advertisement thanking Trump for reinstating a review of the rules.

The EPA completed that review last month and found that fuel-efficiency regulations for cars and light trucks are too stringent and must be revised. Yet a draft that recommended freezing the standards in 2020 showed the administration had something far more aggressive in mind than what carmakers expected, or wanted.

It also contained a legal case for denying California the ability to set tougher standards than the national ones, drawing a sharp retort from Brown and other state officials.

Now, blowback from environmental groups and the prospect of a costly legal battle with California have put carmakers in the position of trying to find a middle ground while not coming off as unsupportive of Trump.

“We support standards that increase year over year that also are consistent with marketplace realities,” Mitch Bainwol, chief executive officer of the Alliance of Automobile Manufacturers, told a House panel on Tuesday.

©2018 Bloomberg L.P.

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