Economy, Regs, & Taxes

Making Stuff in America Again

Trump takes on American automakers to save jobs and pride.

Paul Albaugh · Jan. 10, 2017

Donald Trump isn’t even sworn in as the next president and he’s already making waves within a key sector of America’s economy — the auto industry. Americans have a lot of pride in what we make, and saving American jobs making American products can go a long way toward making America great again.

Trump recently sounded off on Twitter and blasted General Motors for its decision to manufacture the Chevy Cruze in Mexico and then send it to U.S. dealers tax-free. He then gave General Motors a choice to make the Cruze “in U.S.A or pay big border tax!”

There are legitimate reasons GM decided to close its manufacturing plant in Ohio, and it has to do with basic economics in what’s supposed to be a free market system. We put it that way because U.S. government fuel mileage mandates, not customer demand, are a large factor in what automakers produce. In the past few years of low gas prices, there has been great supply (thanks to those mandates) but less demand for the smaller, fuel-efficient compact cars like the Cruze.

And as The Wall Street Journal notes, wages in Mexico are 85% lower than in the U.S., so it’s more profitable for auto manufactures to build these compact cars in Mexico. Further, Mexico has greater access to the global market because of its free-trade deals. “Mexico has 10 trade deals with 45 countries including the European Union and Brazil, which make up half of the global car market,” the Journal explains. “The U.S. has 14 agreements with a mere 20 countries.”

Despite Trumps’ criticism of GM, its chief executive, Mary Barra, said GM won’t be moving U.S. small car production from Mexico back to the U.S. Yet Barra also indicated that she’s willing to work with Trump, and stated that her company has “much more in common” with Trump’s economic views than it does differences. She further noted that she wants to be “part of the solution that allows the country to be strengthened along with business.”

GM isn’t the only auto company Trump has criticized recently; he also went after Ford, Fiat Chrysler and Toyota. Some of them subsequently changed their plans.

Ford announced last week that it was canceling plans to spend $1.6 billion on a new small car plant in Mexico, choosing instead to continue its small car manufacturing from an existing American factory. The company will invest $700 million in Michigan, which will create approximately 700 new jobs.

And as Mike Rowe of “Dirty Jobs” fame put it, “Ford invented mass production. You know, it’s an American company that showed us the critical importance of being able to do the same thing the same way over and over again. And to have them affirmatively digging back into this country to do that very thing — I just think there is an exponential component to it that goes right to the national identity, and I don’t think you can overestimate the importance of feeling good about making a thing.”

Fiat Chrysler also announced that it was going to invest $1 billion in new manufacturing and modernizing plants in Ohio and Michigan, which will add another 2,000 jobs.

Seeing these auto companies create new jobs is certainly encouraging news, especially for America’s heartland, which has suffered tremendously from eight years of Barack Obama’s failed economic policies. It’s certainly a step in the right direction, but Trump would also benefit from undoing some of Obama’s biggest regulations to help solidify gains in the auto industry.

We the People should decide what to buy from whichever company has the product we want for the price we want. Government shouldn’t be interfering in the decisions of businesses.

Obama chose to bail out the auto industry, specifically GM, which led to a taxpayer loss of $10.5 billion. While Trump likely won’t be bailing out the auto industry, over the long term he and the nation will be best served by steering away from Twitter bullying and toward true free market policies that aid in job creation and actually making stuff in America.

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