President-elect Donald Trump threatened to slap a tax on General Motors for importing compact cars to the US from Mexico on Tuesday as rival Ford canceled plans to open a new compact car plant south of the border.



Trump tweeted early Tuesday that GM was sending Mexican-made Chevrolet Cruzes to the US tax-free. He told GM to make the cars in the US “or pay big border tax!”

GM responded that it makes the vast majority of its Cruzes in Lordstown, Ohio, near Cleveland. Only hatchback versions of the Cruze are imported from a factory in Ramos Arizpe, Mexico, and those amount to only a small percentage of the 172,000 Cruzes sold by GM through November, spokesman Patrick Morrissey said.



Meanwhile, Ford announced it would not open a planned facility for assembling Ford Focuses, which would have brought $1.6bn and 2,800 jobs to the state of San Luis Potosí. Instead the company will add 700 jobs at a cost of $700m to a US plant in Michigan, the company announced, as part of its planned expansion of electrified and automated vehicles.

Ford warned shareholders in September that prospects for 2017 were grim and car sales were likely to decline. The company reduced its profit forecasts for the year by $600m.

Rebecca Lindland, executive analyst for Autotrader and Kelley Blue Book, said Ford’s decision was likely driven in part by California’s zero-emission vehicle mandate that comes into effect in 2018. The mandate says 15% of all new vehicles sold in California will have zero emission by 2025.

“Ford’s investment in both new electrified product and production capability at its Flat Rock, Michigan, plant will help position the company to meet the coming standards. The production investment is also great news for the UAW [United Auto Workers] and, I suspect, news that will make the incoming Trump administration very happy,” she said.

Previous Trump tweets attacking other US companies briefly wiped billions off the share price of Lockheed Martin and Boeing. But the market was apathetic to Trump’s latest threats: GM shares were up 1.69% in morning trading.

GM’s Mexican Cruze production amounts to less than a day of output at the Lordstown plant, said Glenn Johnson, president of a United Auto Workers union local at the factory. The Lordstown factory, he said, was not equipped to build the hatchback. “It makes for news, that’s all,” Johnson said of Trump’s tweet. With the exception of a few sedans imported from Mexico last year to meet demand all sedans sold in the US are now made in Ohio, GM’s Morrissey said.

Car sales are expected to drop across the industry this year: Fiat Chrysler has canceled all of its compact and midsize sedans and American automakers are bracing for a leaner 2017 after setting records in 2016. For its part, Ford must slash $3bn a year from its expenditures this year and next year, the company told shareholders in the fall; it is shifting resources to electrification and automation.

Ford has more often been the target of Trump’s ire over the outsourcing of jobs than GM. During his election campaign Trump praised GM and revealed he is the owner of at least three GM vehicles. GM chief executive officer Mary Barra is a member of Trump’s panel of business leaders assembled to advise the president-elect.

