U.S. President-elect Donald Trump took aim at General Motors on Twitter Tuesday threatening to impose a “big border tax” on the car maker, alleging the company is sending “Mexican-made” Cruze models to the U.S.
And General Motors’ stock fell almost immediately.
“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,” Trump tweeted Tuesday, before switching his focus to criticizing Obamacare.
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Shares of GM, which were at $34.38 in pre-market trading, fell about one per cent; however, shares bounced back, rising one per cent before the market opened Tuesday.
However, GM later responded to Trump’s claims, stating most of its Chevy Cruze models are manufactured in the U.S. at it’s Lordstown, Ohio facility – except for the Chevrolet Cruze hatchback, which is made in Mexico for global markets.
“All Chevrolet Cruze sedans sold in the U.S. are built in GM’s assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S,” the company said in a statement, according to CNBC.
In November, GM said it plans to lay off 2,000 employees at two U.S. auto plants, including the Lordstown plant, in early 2017.
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Reuters reported via sources that GM had planned to build the Cruze hatchback in Mexico while continuing to build the Cruze sedan in Ohio.
The shift is part of a larger trend among Detroit’s Big Three automakers to produce more small cars for the North American market in Mexico in an effort to lower labor costs, while using higher-paid U.S. workers to build more profitable trucks, sport utility vehicles and luxury cars.
During his campaign, Trump attacked U.S. automakers for threatening to outsource jobs to Mexico. He previously vowed to block Ford from opening a new plant in Mexico and threatened to impose taxes on cars it shipped back across the border.
Trump would later take credit for stopping Ford from moving its plant to Mexico on Twitter; however, according to the Associated Press, Ford clarified it never intended to move an entire plant, just the production of one of its vehicles.
And its not just auto companies who are being targeted by the incoming president’s tweets. Trump’s targets have ranged from U.S. retailers and defense contractors, to tech companies. Amazon.com, Boeing and Macy’s have been the subject of Trump tweets in the past.
Trump’s tweets have the power to move stocks
Social media users were quick to point out Trump’s tweet about GM appeared to have a direct effect on the company’s stock. But this isn’t the first time Trump has influenced the stock market in 140 characters.
In December, Trump tweeted about the “tremendous cost of the Lockheed Martin F-35,” causing the aerospace company’s stocks to tumble. According to The Independent, Lockheed Martin shares fell about two per cent, while Boeing shares saw a one per cent rise that day.
But, earlier that month, Trump took aim at Boeing tweeting, “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!” According to Slate, it only took ten seconds for Boeing stock to start trading down, eventually shrinking the stock value by over one per cent.
This has raised concerns with several pundits, including LA Times columnist Michael Hiltzik who wrote, “Inevitably, pronouncements about anything by a president have an outsized effect. Sometimes that’s appropriate, but the power to move markets, like the power to deploy armies, is something to be used very sparingly, because people can get hurt by a stray remark or a stray artillery shell.”
– With files from Reuters and The Associated Press