These automakers could be Trump's next targets

A Dodge Ram 1500 pickup truck is displayed outside of the Fiat Chrysler Automobiles NV Warren truck assembly plant in Warren, Michigan, US.
A Dodge Ram 1500 pickup truck is displayed outside of the Fiat Chrysler Automobiles NV Warren truck assembly plant in Warren, Michigan, US.PHOTO: BLOOMBERG

NEW YORK (BLOOMBERG) - Donald Trump's Twitter-fueled bid to crimp free trade in the auto industry began with a warning to Detroit's Big 3 about building factories south of the border. Later, he fired off threats to German automakers-specifically BMW, which is far along in completing a plant in San Luis Potosi, Mexico, that's set to churn out 150,000 cars a year.

But as the Republican president-elect takes office this week-and potentially makes good on a promised 35 per cent tariff on vehicle imports-some sizable auto industry targets for his internet ire remain.

Load up the 140-character word cannon - here's where Trump may be aiming next.

The heart of the US auto industry may be in Detroit, but much of its muscle lies just across the river in Windsor, Ontario. That's where almost 6,000 Fiat Chrysler workers bolt together the Chrysler Pacifica minivan and the Dodge Grand Caravan. At a plant about 200 miles to the east, Ford has been building vehicles for 64 years. Since 2012, it's hired 2,000 people in Canada.

All told, Ontario assembly plants have about 27,000 auto workers, including 5,600 people assembling Chevrolet SUVs and Cadillac sedans at two General Motors plants. There's also some 7,000 folks at two Toyota Motor installations, stamping out Lexus RX crossovers, Corolla sedans, and Rav4 trucks.

Plenty of these cars never leave Canada. For example, the country is the third largest Cadillac market in the world, according to GM.  That's almost one assembly worker for every five in the US, according to labor data culled from the companies and the Alliance of Automobile Manufacturers. When it comes to vehicles, the US trade gap with Canada is actually larger than its imbalance with Mexico - US$28.6 billion in the first 11 months of 2016, versus US$18.3 billion on the southern border.

A car itself, however, is just one product in a sprawling supply chain. The North American Free Trade Agreement more than anything else freed up the movement of parts. Anti-lock brake systems from Toluca, Mexico, and transmissions from Guelph, Ontario, might come together in San Antonio to be riveted onto a Toyota Tacoma, or an Accord rolling out of the massive Honda plant in Marysville, Ohio.

Each part on a North American vehicle - be it in Canada, Mexico, or the US - may have crossed borders up to eight times, according to a recent analysis from the Center for Automotive Research. Of course, names of suppliers such as Robert Bosch and Linamar Corp don't have as much heft in a Twitter tirade as Ford or GM, but if Trump is spending long nights in Mar-a-Lago poring through Federal Trade Commission spreadsheets, he won't like what he sees (Trump's representatives didn't return requests for comment). The US trade balance with Mexico for auto parts is about one-third larger than that for vehicles themselves.

Finally, Trump could take a page from the Ronald Reagan playbook and go after Asia. On a list of the most-popular US cars that aren't made in the US, eight of the top 10 come from Japan-based companies. Subaru's Forester tops the list, followed by Nissan's Rogue.

On vehicles alone, the US trade balance with Japan is almost twice as large as its gap with Mexico. South Korea, the home of Hyundai and Kia, also sends a steady and fairly one-way stream of cars to America.

A widespread 35 per cent tariff on imported vehicles would have a chilling effect on all three of these regions. Under such a penalty, the entire US auto industry might look a lot like the current market for pickups, which has faced a 25 per cent tariff on imports since the early 1960s. When it comes to trucks, American consumers have far fewer choices than they do for something like a sedan.

The so-called chicken tax (don't ask) has indeed pushed some foreign automakers to build plants in the US. Toyota makes Tacomas in Texas, for example, while Nissan Titans come out of Canton, Missisipi, and Honda bangs together its Ridgeline in Lincoln, Alabama. But some of the biggest names in the business, including Hyundai and Volkswagen, stay out of the segment entirely. Mercedes is adding a pickup truck to its product line this year, but ironically, it has no plans to sell it in America.

All told, if the US were to abolish NAFTA, it would eventually welcome some 22,000 new production jobs, according to the Center for Automotive Research. The bad news though is that the country would also lose 37,000 jobs, as vehicle prices creep up and choices and demand tick down.

"That's a very conservative estimate," said Kristin Dziczek, director of the Industry, Labor & Economics Group at the Center for Automotive Research. "I don't know many people who can afford a 100 percent Made-in-the-USA vehicle."

The Rogue is also assembled in Smyrna, Tennesee.