US border tax plans raise major questions for GM, Fiat


Republican plans to introduce a US border adjustment tax have auto giants General Motors (NYSE: GM - news) and Fiat Chrysler looking for clarity, company executives said this week.

Tax plans advanced by some Republicans currently include arrangements to reform corporate taxation while favoring exports but discouraging imports.

President Donald Trump has said the measure could be a job creator but the proposal has faced stiff opposition from some conservatives and import-reliant industries. Draft legislation has not been introduced.

Kevin Frazier, a spokesman for Fiat Chrysler Automobiles, said Thursday that CEO Sergio Marchionne believed the company needed to know more.

"While it's our practice not to discuss future product and production plans, let me remind you that Mr Marchionne has said that 'we?re waiting for clarity,' Frazier told AFP in an email.

Mark Reuss, GM's executive vice president for product development, told reporters this week that carmakers planned and developed their product lines years in advance.

This made it difficult to anticipate what the future effects of the shifting political landscape would be, he said, adding that a border tax remained a significant unknown.

"We don't really know what that is," Reuss said. "How do you make product plans and capacity allocations?"

Reuss spoke to reporters after a news conference at the GM Technical Center in Detroit, where he introduced a new Buick Regal that will be built for GM by Opel in Germany.

The production of the Regal in Russelsheim will go forward even though GM is selling both the Opel and Vauxhall brands to France's PSA Group, he added.

Plans to manufacture the car in Germany did not anticipate a possible US border tax, which could raise the price of the Regal and other imported vehicles significantly.

GM is developing contingency plans to shift production and capital if US tax policy changes, according to Reuss.

"The agility piece is very important. You have to be prepared to do it faster than anybody else," he said.

Buick now sells vehicles in the US that are built in China and South Korea as well as in the European Union.

Meanwhile, Fiat Chrysler is moving ahead with plans to import the new Jeep Compass into the United States from Mexico, starting this month.

Ford, however, has said it will absorb a $200 million write-off a Mexican assembly plant on which construction had already started but halted in January.