Hours after President-elect Donald Trump threatened to levy hefty import taxes on vehicles made outside the United States, Ford Motor Company announced that it scrapped plans to build a new $1.6 billion plant in Mexico and would invest instead $700 million in expanding one of its domestic factories in Flat Rock, Michigan.
There was speculation that perhaps Trump’s threats during and after the election season played a role in the abrupt decision by Ford.
For instance, last year he threatened Ford “with higher taxes as it looked to move its Focus-model production to Mexico,” according to Investor’s Business Daily.
This plan was later scrapped, leading Trump to celebrate on Twitter.
I worked hard with Bill Ford to keep the Lincoln plant in Kentucky. I owed it to the great State of Kentucky for their confidence in me!
— Donald J. Trump (@realDonaldTrump) November 18, 2016
Likewise, Trump gave a similar threat against General Motors early Tuesday morning, writing, “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers – tax free across border.”
“Make in U.S.A. or pay big border tax!” he added.
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!
— Donald J. Trump (@realDonaldTrump) January 3, 2017
Did this rhetoric play a role in Ford’s decision? Maybe. Either way, not everyone was pleased with the president-elect’s forceful and seemingly successful tactics.
Some conservatives in particular accused him of trying to pick winners and losers by meddling in business affairs and, in some cases, proffering subsidies in return for corporations abiding by his wishes and keeping their operations in-house.
“One act of intervention encourages more,” warned RedState after Trump’s Carrier deal last month, wherein United Technologies agreed to keep 1,000 jobs in the United States in exchange for tax breaks. “Welfare encourages people to seek benefits from government rather than by earning money through providing value to society. Corporate welfare does the same.”
The argument by RedState and others was that Trump should focus on destroying regulatory red tape so as to incentivize manufacturers to opt to produce their products domestically of their own volition without special incentives.
However, some claim that combining this deregulation with Trump’s stern rhetoric and threats could perhaps lead to even better results. Since the president-elect must first take office before he can start deregulating, however, the American people will have to wait to find out if this will be his approach.