LDN - Business

Trump urges automakers to build more vehicles in U.S., blasts NAFTA

[May 12, 2018] By David Shepardson

WASHINGTON (Reuters) - President Donald Trump on Friday pressed automakers to build more vehicles in the United States and launched a fresh attack on the North American Free Trade Agreement that has benefited them, while the companies urged him to work with California to keep nationwide U.S. vehicle emissions standards.

CEOs or senior executives from 10 U.S. and foreign automakers met with Trump for about an hour at the White House as the Transportation Department considers loosening federal fuel efficiency and pollution standards implemented under Democratic former President Barack Obama.

Afterward, two major auto industry trade groups said in a joint statement that Trump expressed an "openness to a discussion with California on an expedited basis." California and 16 other states covering about 40 percent of the U.S. population sued last week to block the Trump administration's efforts to weaken the fuel efficiency requirements.

A U.S. Transportation Department draft proposal would freeze these requirements at 2020 levels through 2026, rather than allowing them to increase as previously planned. The Trump administration is expected to formally unveil the proposal later this month or in June.

The chief executives of General Motors Co, Ford Motor Co and Fiat Chrysler, along with senior U.S. executives from Toyota Motor Corp, Volkswagen AG <VOWG_p.DE>, Hyundai Motor Co, Nissan Motor Co, Honda Motor Co, BMW AG and Daimler AG met with Trump, as did the heads of the two trade groups.

"We're really talking about environmental (controls), CAFE standards, and manufacturing of millions of more cars within the United States," Trump, known for his "America First" policies, said at the top of the meeting, referring to the Corporate Average Fuel Economy standards for cars and light trucks in the United States.

"We're importing a lot of cars, and we want a lot of those cars to be made in the United States," Trump added, specifically mentioning Michigan, Ohio, Pennsylvania, South Carolina and North Carolina.

Automakers want the White House and California to reach an agreement on maintaining national standards, fearing a prolonged legal battle could leave the companies facing two different sets of rules - and the state level and nationally - and extended uncertainty.

Much of the hour-long meeting focused on NAFTA and other trade issues, with Trump blasting the pact with Canada and Mexico.

"We're renegotiating it now. We'll see what happens," Trump said, adding that Mexico and Canada "don't like to lose the golden goose."

"But NAFTA has been a horrible, horrible disaster for this country, and we'll see if we can make it reasonable," the Republican president added.

Automakers have called NAFTA a success, allowing them to integrate production throughout North America and make production competitive with Asia and Europe. They have noted the increase in auto production over the past two decades with NAFTA in place, and have warned that changing it too much could prompt some companies to move production out of the United States.

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President Donald Trump, flanked by Ford CEO James Hackett and White House chief economic adviser Larry Kudlow, meets with chief executives of major U.S. and foreign automakers at the White House in Washington, U.S. May 11, 2018. REUTERS/Jonathan Ernst

Major automakers reiterated this week they do not support freezing fuel efficiency requirements but said they want new flexibility and rule changes to address lower gasoline prices and the shift in U.S. consumer preferences to bigger, less fuel-efficient vehicles.

'FULLY SUPPORTIVE'

Fiat Chrysler Chief Executive Sergio Marchionne, whose company is shifting production of Ram heavy-duty pickup trucks from Mexico to Michigan in 2020, told Reuters before the meeting his company is "fully supportive" of Trump's efforts to revise the mileage rules and hoped for "an agreed way forward."

NAFTA changes proposed by Trump's administration would not require Fiat Chrysler to end production in Mexico but rather to "redirect" exports of Mexican-built vehicles to other global markets, Marchionne added.

Marchionne said he still hopes the administration will reach a deal with California to maintain nationwide standards and said Trump is an ideal negotiator to get an agreement.

Noting that automakers want a deal with California, Democratic U.S. Senator Tom Carper said, "Our businessman and self-proclaimed 'dealmaker' president should be able to take yes for an answer and help us secure a win-win solution that is well within reach."

U.S. Trade Representative Robert Lighthizer, Transportation Secretary Elaine Chao, White House economic adviser Larry Kudlow and Environmental Protection Agency chief Scott Pruitt also attended the meeting. Trump directed Chao and Pruitt to continue administration talks with California to see if a deal can be reached quickly, an auto industry source said.

Democrats and environmental advocates plan to challenge the administration's plans to weaken vehicle rules touted by the Obama administration as one of its biggest actions to combat climate change by reducing planet-warming emissions.

The Trump administration plans to argue that freezing the rules would lead to cheaper vehicles, boost sales and employment and improve safety by prodding faster turnover of older vehicles.

The Obama-era rules adopted in 2012 sought to double average fleet-wide vehicle fuel efficiency to about 50 miles (80 km) per gallon by 2025, but included an evaluation due by April 2018 to determine if the rules were appropriate.

(Reporting by David Shepardson in Washington; Additional reporting by James Oliphant; Editing by Will Dunham)

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