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Automakers, Dependent on Mexico, Face a Rougher Road with Trump (reuters.com)

Posted by msmash on from the aftermath dept.

An anonymous reader shares a Reuters report: The election of Donald Trump as U.S. president puts new pressure on automakers and other manufacturers that have become dependent on open trade with Mexico, and raises the risk they will face higher costs. Automakers could also take a hit if instability in financial markets undercuts the confidence of consumers in the United States and other major markets at a time when growth in U.S. auto sales has stalled. Investors sold off U.S. stocks and the dollar in reaction to Trump's unexpected win. Shares in Japanese automakers, which also rely on Mexico as a production hub for the U.S. market, slid as well, underperforming the benchmark Nikkei index, which fell 5 In afternoon Tokyo trade, shares in Toyota Motor Corp were down 6.5 pct, Nissan Motor Co Ltd was down 6.0 pct, while Honda Motor Co fell 7.8 pct. U.S. manufacturing groups and companies on Wednesday said they want to work with the new administration.

6 of 106 comments (clear)

  1. It was bound to happen. by BarbaraHudson · · Score: 3, Insightful

    There will certainly be a rejigging of trade. It's not fair trade when it becomes a race to the bottom for workers.

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    1. Re:It was bound to happen. by CRCulver · · Score: 3, Insightful

      If companies are limited in what they can import from cheap-labour countries, then they can just bring the manufacturing here and automate the hell out of it so that labour costs are minimal. "Rejigging of trade" need not equate to a significantly higher standard of living for Americans in those particular state. I found this recent election interesting because of two things that were not talked about my the candidates. One was any kind of awareness that automation is changing . Both candidates uttered similar promises of job growth, and Trump offered bringing factories back as an employment panacea, as if this were 1986 and not 2016. Perhaps both candidates thought that offered a longterm vision would just cost them support when so many voters wanted comforting and nostalghia instead of a sober look at the future. (The other was religion. In previous elections, at least one if not both major-party candidates had to position themselves as men of faith, show they were well-known to a particular local congregation, etc. This time, neither Clinton nor Trump even bothered making a pretence of that. Just goes to show how religious observance in the US has dwindled, even if evangelicals are still a major voting bloc and, bizarrely, were often more pro-Trump than anti-Clinton.)

    2. Re:It was bound to happen. by scamper_22 · · Score: 4, Interesting

      Isn't it strange that America and most Western countries have stricter trade between their own states/provinces than they do with other countries?

      If you're in the US, ponder the interstate commerce clause. Ever wonder why there is a federal minimum wage? It's because when minimum wages were being introduced, it didn't take a PHd to understand that if Alabama had no minimum wage and New York had a $5 minimum wage that a lot of jobs would go to Alabama. New York workers would actually be prevented from competing to get those jobs.

      The result is the rather common sense interstate commerce clause. If goods/services are destined for trade they are subject to be regulated by the federal government... part of it is to ensure common labor, environment standards...

      The question every western country should ask is where did this logic go when it came to international free trade. This is not a left/right issue. It is an issue of the rule of law.

      There are various resolutions to the issue.
      1. Could mandate that any goods coming in from another country must obey the US federal minimum wage.
      2. Could not sign free trade deals with countries with significantly lower labor/environmental rules.
      3. Remove minimum wage regulations in the USA, giving American workers the ability to compete on a level playing field. ...

    3. Re:It was bound to happen. by Feral+Nerd · · Score: 2

      which is why the REAL Issue is that Mexico has a pay of $3.00 PER DAY. What is needed to adjust NAFTA to make it fair and better for all, is to require Mexico to slowly bring their pay up to $3/hr or better.

      I don't see that happening. And if it does, the manufacturing will probably come back here - and be done by robots. That's the only reason why it's still down there - Mexicans are still cheaper than automation (and of course the capital investment has to be recovered; which adds to the inertia of staying there.)

      That is true, Trump promises to bring back jobs for completely uneducated people but many of those jobs will be taken over by robots even within his first term of office. If Trump really wanted to improve the lives of these rust belters that elected him he'd be promising them education levels that allow them to function in a future economy instead of goading them with toll barriers and bigotry.

  2. No, not all automakers will take that hit by WindBourne · · Score: 4, Insightful

    Tesla is made in America and while they import parts, they are in the process of bringing that all in-house, or least their manufacturing to California.

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    1. Re:No, not all automakers will take that hit by Austerity+Empowers · · Score: 2

      The question is whether it's more important ot support companies that do business entirely in America, or to support someone's energy agenda and associated kickbacks. I'm fine if Tesla starts looking like a value compared to its competitors, but I have this funny feeling it's not going to go down that way.