Many in America have been understandably alarmed by our president’s yearning to place tariffs of up to 25 percent on imported automobiles. And, while many have made very compelling moral arguments as to why it is wrong to place expensive tariffs on products from our own allies, I figured that as someone who has closely studied the auto industry as a hobby since I was in elementary school, as well as being a car enthusiast, I could offer a more data driven, analytical take on why this is a bad decision.
First, we must address the elephant in the room: American automakers, by and large, do not make product that is competitive with automakers from Japan and Europe. Fiat Chrysler group recently killed off their subpar Chrysler 200 and Dodge Avenger product lines, and Ford, while making an excellent sedan in the form of the Fusion, has announced that they plan to cease sales of light passenger vehicles in the U.S. altogether. This means that if you want to buy an affordable passenger sedan, your only option is to buy from Chevrolet-who aren’t exactly synonymous with quality-or buy from one of the plethora of foreign automakers such as Honda, Toyota, Hyundai, or Nissan, at least now that Ford and Fiat Chrysler do not even plan to manufacture light passenger sedans. And, while America has made leaps and bounds in fit and finish, reliability, and overall build quality, American luxury brands such as Cadillac and Lincoln still have a ways to go before they can truly take on the likes of Mercedes Benz, BMW, Lexus, and Hyundai’s Genesis sub-brand.
There’s also the fact that in this day and age, “foreign” and “domestic” don’t really mean everything. The biggest U.S. auto exporter is in fact BMW Group, who manufactures all of their crossover and SUV vehicles sold worldwide out of their Greer, S.C. assembly plant. But that’s not all: Honda operates multiple manufacturing plants in Ohio and Indiana. Mercedes Benz, much like BMW, builds all of their crossover and SUV offerings worldwide out of an assembly plant in Alabama, and they have recently shifted production of the C Class compact sedan for the US market to this plant. Volkswagen builds the Jetta compact sedan, Passat midsize sedan, and Atlas family SUV out of their Chattanooga, Tenn. factory. Nissan builds 95 percent of their U.S. offerings out of 4 plants located in Tennessee and Mississippi. Are you starting to notice a trend here? Not only do these foreign automakers operate several plants in the U.S., but many of them are operated in states Donald Trump carried in a landslide in 2016. If there’s one thing that could get The Don to scrap these tariffs, it’ realizing that starting a global trade war would not only hurt U.S. automakers, but put workers in multiple states he carried livelihood’s at risk, not to mention anger a sizeable portion of his base
And last but not least, we must deconstruct the narrative that Trump himself has spun that “you never see any Chevrolets on the streets of Germany” to argue that U.S. automakers have a hard time selling their cars in Europe. This is only a half truth. While the Chevrolet brand has been largely unsuccessful at attracting European buyers, former GM subsidiary Opel has sold badge-engineered versions of American GM products for years, including a rebadged version of the Buick Regal known as the Opel Insignia, a rebadged version of the Chevrolet Bolt known as the Opel Ampera, and a rebadged version of the Buick Cascada known as the Opel Cascada. Additionally, Ford has a very successful European branch, largely in favor to them selling different kinds of cars to cater to the wants and demands of a European consumer base, being the 6th best selling brand overall in Europe in 2017. So, while Europeans might not have the same fervent appreciation for full-size trucks and SUV’s that us yanks have, American automakers have been doing just fine in Europe.
To close out this article, I wanted to have a quote from the man that was Trump before there was Trump, and indeed, the grandfather of the American conservative movement. In a radio address, President Ronald Reagan said that “We should beware (of the) demagogues who are willing to declare a trade war against our friends, weaken our economy, our national security, and the entire free world, all while cynically waving the American flag.” Putting tariffs on products made by our long-standing committed allies and friends isn’t just a suicidal foreign policy move. It flies in the face of the fiscal conservative values of maintaining an open market where consumers are free to choose what products to buy as they see fit, and is textbook government intervention in the economy.
Andrew Kelly is a senior at Benicia High School who graduates tomorrow.
Sharing is caring!
Good article Andrew. Just what is the tariff on an American made brand shipped to any EU country? That is what this is all about. Level field. Yes many foreign cars are now made in the USA by American labor but that was a long time coming and it does give Americans very good jobs. That is another reason for the tariff tactics that President Trump is looking at. This is not a one-way street. Also take a look at the goods coming into America from both Canada and Mexico. Many of those goods are not made in those country’s but shipped into those country’s and then exported to the USA as if they were made in those country’s. Take that away and we have a deficit trade with Canada not a surplus. It is not as simple as you make it sound. There are many manufacturing plants coming back to the USA for two reasons. One is the cost of energy and the other is automation. Less cost for energy and labor to run a plant. Keep ,them coming and everyone will have a job. Not at all as you say completely. Looking forward to your next ARTICLE ON TARIFFS AND TARIFFS ONLY.
Hey Bob,
I agree with you that outsourcing to the other 2 countries in the NAFTA zone is a big problem, but that should be a topic bought up at the next NAFTA renegotiation-not used as a cause to ignite a global trade war.
Andrew
Andrew I would look at the number of cars made in China. It may surprise you. Tariffs are necessary to level the field. I look out for America first.
Hey Bob,
While it is true that many manufacturers nowadays operate plants in China, seldom do these cars built in China ever come stateside. These Chinese plants are mainly used to produce cars for the Chinese and sometimes Korean markets.
Appreciate your comments as always,
Andrew
So; your answer closes the market for American made cars. How many American owned car plants are in China. That is an important factor. Tariffs are a big factor but if no cars are coming into China from America it is a mute point. Just how many cars does China ship to the USA. A very important point.
I’d say that if no jobs are being outsourced from the US, it’s okay. You might have a point to be made if everyone shifted their production to China and stopped making cars everywhere else, but as it stands the factories in China are primarily used for cars designed for that market and sold there.
When American made cars are made in China it is a 50/50 deal. That way they can steal our technology. Not good.
Andrew, You are wise beyond your years. You hit the nail squarely on the head when you wrote “American automakers, by and large, do not make a product that is competitive with automakers from Japan and Europe.” That should be a well accepted fact.
A well thought out, fact based and articulate article. Bravo and thank you for sharing your wisdom on this topic.
OK article as far as it goes. Of course, there aren’t any tariffs on autos, only talk (bluster some might say) to irritate other foreign folks prior to the G7 conference. It is a tactic. There are some new tariffs on steel and aluminum. The US government does need the additional cash and the domestic factories that manufacture steel and aluminum are not able to compete–which is why a tariff is sometimes imposed. Then again, we get back to the main character-Trump has said all along that we’ve taken it in the shorts in trade agreements; threats of tariffs bring folks to the table … it is a negotiating tactic that basically says, you need our markets more than we need your products; so let’s talk about it.
Andrew, I admire the time you took to put this article together and I am ASSUMING the facts you are stating are correct. However, When you refer to the President as The Don, or to former President Reagan as the Trump before Trump, you come across as a biased writer and that alone makes me question everything you say in your article. Unless you are penning a political column, you should really try to report the facts and stay away from the two bit commentary.
As for the comment from someone else about US automakers not making products competitive with Europe and Japan, as a well accepted fact. I wonder how Mr. Petersen would feel if Ford, GM, or Fiat Chrysler falsified data on fuel emissions like VW did? I have found the quality of the cars I have driven by the the Big 3 to be every bit as good as any European or Japanese car. That same could not be said a few decades ago but not any longer.
John,
I have owned numerous European, Japanese, and American vehicles. I speak from experience. Believe me when I say, American vehicle come in third.
One of many reasons why, includes that shareholder value usually determines the success of a US manufacturer’s management team, the pressure to increase profits THIS QUARTER is never ending. Engineers are far more likely to be asked to find a way to reduce costs than improve quality.
Sincerely,
Mr. Someone Else
Mr. Someone Else,
Read this and let’s talk. By the way, those are Korean not Japanese cars at the top.
https://www.nbcnews.com/business/autos/which-car-ranks-highest-quality-surprisingly-it-s-kia-n775161
Yup. Just sold my Sorrento. Served me quite well. I’d have kept it, but, just wanted a new car. Now I have a Wrangler, a Tacoma, and a CrossTrek.
Also, don’t know if you have seen this: https://www.caranddriver.com/features/the-trouble-with-jd-powers-initial-quality-study-feature
Dude, that article is 11, ELEVEN, years ago. Car companies were coming out of their worst performance ever and changed, adapted, evolved. The article I referenced was from last summer. Apparently you are one to hold a grudge.
Chief, Tell me what has changed in 11 years.
“Grudge” ? Sorry, you lost me. Are we still talking about cars?
Your opinion is fine but it is not the only opinion. I have owned German made, English made, Japanese made, Korean made and of course many American made cars. I would disagree with your opinion. I have always felt that the American made cars were better. But we all must remember my opinion comes from a Patriot.
Bob,
As pertains to buying European cars I heard this years ago, but it still holds true to some extent:
Never buy a French car, unless you live in France.
Never buy an Italian car, unless you are a mechanic.
Never buy an English car. Never.
Once you own a SAAB, You will own it for life..
If you can afford a BMW, buy a Mercedes
Very good Dennis. That will set some of the folks free they are already a little ripe.
Another reason American cars are generally sub-par is that corporate management changes frequently, and with these management changes we see dramatic changes in corporate direction, product planning, resource allocation; more often than not
management demands revolutionary new products. While this demand for innovation is OK, it’s a very risky approach to the car business. After all, if “the next big thing” is a flop, your company just wasted a couple BILLION dollars.
Another opinion
Objectively speaking, in comparison foreign, especially Japanese, automaker’s management is comfortable with incremental improvements in sales, so they don’t demand big changes during every redesign. Management is very stable – the same people are in charge for years. This stable, incremental approach means that engineers can focus on steadily improving every individual system in a vehicle (look at the Tacoma, consistently the best in class, and design has not changed significantly in 30 years), rather than reinventing something every 5-7 years. Quality is rarely put ahead of profits
Hey John,
I feel you may have a point with “The Don” comment, and I do apologize for putting that instead of something more objective, but the “Trump before there was Trump” comment was more intended to draw parallels under the circumstances in which they were elected and their public personas-no disrespect intended.
Also, keep in mind the “by and large” part of that statement-the big 3 does put out some great cars, but with many of them wanting to scrap traditional sedans in favor of SUV’s, it seems like very soon the only option for buying a normal sedan that isn’t a luxury model will be to go foreign.
It there made in America by American labor what difference does it make. Buy the car that suits your needs. No Tariffs
The difference is that they will only make SUV’s instead of sedans,,,,?
If made in the USA by a foreign maker by American labor it makes no difference. No Tariffs and American made. The label on goods says where it is made. Buy a shirt and it tells you where it is made. It still contributes big time to our economy. Also reduces the trade difference. America wants foreign makers to invest in factory’s in America. India is a good example. A mill in the south. I assume you know who owns Shell Oil. Sorry Andrew President Trump’s auto tariffs do make sense. Along with other tariffs. Canada with 39mil population is not going to dictate terms to American nor is France or Germany. Do I sound like an isolationist. No. Just understand world economy.
No home delivery today. Press broken.