2016/08/09

In Detroit, Trump's Anti-Trade Message Clashes With Auto Industry Realities

Donald Trump delivers an economic policy address detailing his economic plan at the Detroit Economic Club on Monday. (Photo by Bill Pugliano/Getty Images)
Republican Presidential nominee Donald J. Trump continued his assault on major trade deals during an economic speech in Detroit Monday, promising that if he’s elected president, “Americanism, not Globalism, will be our new credo.”
He slammed Democrat Hillary Clinton for her support of the North American Free Trade Agreement, saying it cost the auto industry more than 100,000 jobs, and predicted that if she’s elected, she will approve the Trans Pacific Partnership, which he said would be “an even bigger disaster for the auto industry.”

“A vote for Hillary Clinton is a vote for TPP and NAFTA. Before NAFTA went into effect, there were 285,000 autoworkers in Michigan. Today that number is only 160,000,” Trump said. “Detroit is still waiting for Hillary Clinton’s apology. She’s been a disaster.” (For the record, Clinton has said she opposes the TPP and is willing to renegotiate NAFTA.) Michigan has indeed lost more than 100,000 auto manufacturing jobs since 2000, but the number has been growing since bottoming out in 2009.

Trump’s message, delivered to a mostly white-collar business crowd of more than 1,500 at the Detroit Economic Club, was nonetheless aimed at disenfranchised blue-collar workers in places like Michigan who have lost jobs or fallen behind on income.
The New York businessman called the nation’s 4.9 percent unemployment rate “one of the biggest hoaxes in American politics,” and painted of grim picture of the Motor City, calling Detroit “a living, breathing example of my opponent’s failed economic agenda. Every policy that has failed this city, and so many others, is a policy supported by Hillary Clinton. She supports the high taxes and radical regulation that forced jobs out of your community.”
Under a Trump presidency, he vowed, Detroit will come “roaring back.”
Apparently he hasn’t noticed that Detroit, which exited bankruptcy in December 2014, is already on the upswing and that the U.S. auto industry just came off its best year in history.
Trump insisted he is not anti-trade. “Trade has big benefits, and I am in favor of trade. But I want great trade deals for our country that create more jobs and higher wages for American workers. Isolation is not an option, only great and well-crafted trade deals are.”

The problem with Trump’s position is that it’s not possible to wind back the clock on globalization. The auto industry went global long before NAFTA was enacted, and automakers today are heavily dependent on their international supply chains.

When companies like General Motors GM +0.50% or Ford Motor F +0.78% build plants in foreign countries, it’s not to export cheap cars back to the United States Instead, it’s to grow their businesses by selling to customers in places like China, now the world’s largest automotive market.

It’s true that Mexico has emerged as major hub for auto production in North America, not only because its labor rates are about 80 percent cheaper than in the U.S. but also because its trade policies are among the most liberal in the world. Mexico has free trade agreements with 44 countries, making it especially attractive to European and Asian automakers like Honda, Toyota, Volkswagen, Audi and Mazda. U.S. automakers have opened plants in Mexico for similar reasons. If they were to pull out, they’d be at a competitive disadvantage.

One point that Trump never seems to mention in his attacks on Clinton and NAFTA: Although the NAFTA deal is most closely associated with former President Bill Clinton, who signed it into law in 1993, the impetus for a North American common market began in the early 1980s under President Ronald Reagan. The details were negotiated by President George H.W. Bush in 1992 and the pact was ratified by Congress the following year.

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