DETROIT — First the Obama administration bailed out much of the U.S. auto industry, pulling it out of a tailspin. Then it reshaped the business, with regulations and policies intended to increase fuel economy, improve safety and add jobs.
Now, under President-elect Donald Trump, the industry is bracing for another wholesale makeover. Perhaps no industry could be affected in more ways by the new administration than the auto business.
That became all the more apparent last week, with Trump’s selection of Scott Pruitt — the Oklahoma attorney general who is a climate-change skeptic and close ally of the oil and gas industry — to run the Environmental Protection Agency.
The changes under the Trump administration could include possible tariffs that will raise prices on imported vehicles and parts, fewer subsidies for electric cars and policies that discourage automakers from moving products from American factories to Mexico.
And any scaling back of fuel-economy goals by the Trump administration, if Pruitt’s climate change skepticism and embrace of fossil fuels translates to policy, could also influence the types of vehicles the industry plans to build in coming years — and where it builds them. Bigger models like SUVs and pickup trucks are less fuel-efficient than cars but more profitable for automakers. And their steeper price tags can help pay for the higher labor costs of making them in the United States.
In a move that underscored the new psychology since Trump’s election, Ford Motor — which had been a target of his criticism — in mid-November decided to keep building a Lincoln SUV in Kentucky rather than Mexico. And yet, for a capital-intensive industry that routinely makes billion-dollar bets on new factories and products, the uncertainty is unnerving.
“Our membership is just perplexed right now,” said Gloria Bergquist, vice president for public affairs for the Alliance of Automobile Manufacturers, which represents a dozen carmakers, including General Motors, Ford, Volkswagen and Toyota, on safety and environmental issues. “This is all uncharted territory.”
Trump has yet to detail any coming changes. But pursuing policies similar to those he promoted in his campaign could change the entire manufacturing industry by penalizing companies for investing overseas or by stifling free-flowing global trade.
No change would be more consequential to the auto industry than applying steep tariffs on imports from Mexico and elsewhere. Companies could be forced to radically change how and where they get commodity parts, the production of which has been migrating to low-wage nations for decades.