With a Few Tweets, Trump Managed to Shame Companies Out of Foreign Investments

2:28 pm
2 Rob Ashley
General Motors and Ford found themselves under the ire of the boisterous President Elect. Stocks fell and accusations were thrown. But it seems that the tactic is working.

There are still a few days before Donald Trump takes office as the President of the United States, but his effects start to show, at least for the American Auto industry. Since the election ended in his favor, Trump has been shaming American companies for their foreign investments, calling for them to build their factories within US borders and promising heavy taxes if they fail to do so. The recent targets were Ford and General Motors, two of the largest auto companies in the world.

Trump

The cause for Trump’s dissatisfaction with these companies is their Mexican factories. Thanks to a free trade agreement between the countries, US companies can manufacture in Mexico and import the product to the US without paying taxes. Trump has targeted said free trade agreement as part of his platform, but dissolving it can take time. Instead, Trump focuses his energy on the companies themselves, claiming that they are exporting American jobs to the southern neighbor.

This form of criticism over social networks have proved surprisingly effective. Not only did it spark consumer outrage, but it hit the companies where it hurts the most: their investors. Yesterday, a single tweet about GM making models of the Chevy Cruze in Mexico caused the company’s stock to drop by 1%. It wasn’t long until an official statement was sent, refuting the accusation. Similar events occurred when Trump tweeted about Boeing and Lockheed Martin.

Ford

Ford was also the target of Trump’s angry tweets. The company had planned to create a factory in Mexico with an investment of $1.6 billion. At about the same time as GM went under fire, Ford announced its going to scrap the Mexican plant in favor of boosting its factories in the State of Michigan.

In both Ford and GM’s cases, the number of jobs saved is not very high. Ford’s decision will only create 700 more jobs in the US, and GM claims that no American jobs will be impacted, even if it will stop manufacturing in Mexico, as the cars made there are almost never sold in the American market. These are small cases in terms of economy, but they do signify a trend. When the future President of America tweets, people listen. More than that, investors listen. Those who want to see which American company is next to see a drop in its stock value, may only need to look at Trump’s Twitter feed.