Video description: President Donald Trump met with auto executives at the White House Tuesday, promising to reduce unnecessary regulations and warning them on moving business overseas.
(I didn’t watch that video, don’t know what’s in there)
I’m mystified. What can Trump actually do to “compel” free-enterprise car manufacturers to rearrange their manufacturing arrangements?
Only bluster and angry tweets?
“Impose 35 percent tariffs on imported vehicles”? Can the executive branch do that? (My guess as to the answer: “Hahahahaha! No.”)
Enact some other kind of impediment through executive action? Wouldn’t that be against WTO? NAFTA? What would be “realistically” possible (ignoring economic or political consequences)?
The only remotely comparable case I remember of executive action against imports is the 1980 Automobile VER. But that was a “voluntary” deal with a foreign government, against foreign manufacturers, and even that kind of deal is against WTO rules nowadays according to that link.
Executive actions have a lot of power. But since the GOP does have a slim majority in both Houses, Prez Trump should not have any major issues with Congressional support.
Thanks, DrDeth. I do wonder about (actually, I can’t imagine there’s) Congressional support for harsh action. But not sure if that’s worth the GD thread. What kind of power would Trump (roughly) have with executive action alone?
I would imagine that Congress is going to have serious problems with tariffs on their donors’ products and may take action to restrict or abolish the ability of the president to levy same. Trump really needs to listen to the economists as to why this sort of arbitrary action is a bad idea. High tariffs mean fewer purchases, which means profit loss, which means dropping stock market. Is this really what he wants to happen?
I can see it now - a whole network of underground shipping.
Cars manufactured in Mexico, or Canada, or wherever, being brought into this country in unmarked trucks, and dropped off at night and introduced into the factories as if they were made here.
Bootleg cars! A thriving underground. Maybe we can have “speakeasy” garages for service?
Or maybe the big three just say fuckit and close down domestic production, because the costs associated with said production (that caused foreign production to be so desirable in the first place) make American cars noncompetitive in the US, undercut by domestic-made foreign cars. Wonder if Donnie will like that?
But aren’t a lot of these things covered under treaties? Congress can’t just give the President power to ignore treaties, because nobody in the government (Congress included) has the power to ignore treaties.
That’s muddled, if not a contradiction. If it’s barred, Mexico would just sue/appeal, and win? Would Mexico do that for GM? Would GM even be a party? The article gets only more muddled from there.
And what happens if Japan, or whoever, returns the favor and raises their tarriffs, or prohibits US stuff from being sold there at all? What if no one decides to sell us critical raw materials? Does the Orange One think we’re just going to live in a bubble, totally self-sufficient? Cuz that won’t work. It’s also not sound business.
Given the length of time it would take for an American company to start manufacturing, say air bags, I can’t imagine anything approaching 100%. Even ignoring the various patents that would have to be sorted out.
But I think we are continuing the fatal flaw of taking Trump literally but not seriously. He is going to make all these threats, get what he can get, declare victory and all his supporters will congratulate him for his success. While the rest of us stand in the dust saying but he said he would…
He is a 50%+1 president. He isn’t interested in anything more than winning.
All he is going to accomplish is to make cars more expensive for the American consumer.
Unless he is ready to offer a subsidy.
Either a carmaker who is threatened with punitive tariffs for making cars in Mexico will say “fuck it” and sell that stock elsewhere, which means existing players can charge more.
Or they do move to the US, spending billions in the process. That money has to be recouped from somewhere; guess who is stuck with the bill.
Japan and indeed most other big countries run trade surpluses with the US. If both sides decided to go into tit for tat tariffs, in theory the other countries would lose more, since they sell more to the US than vice versa.
By threatening tariffs, other countries may be compelled to buy more from the US, in the form of reduced tariffs on US products, or something else. This should be good for everyone.
Whatever other quarrels you have with his platform, I don’t think there’s anything unsound about Trump’s approach to trade, other than it being completely dependent on the autocratic whim of the president instead of something more systematic and predictable, but the president was properly and freely elected, which is a fine enough check on his power as anything else. He’s certainly not wrong that other countries run government directed trade policies that tend to increase their exports to the US while reducing the amount of goods imported from the US. Whether these policies or any Trump policies responding to this is an aggregate benefit or loss for either country isn’t as interesting as which interest groups (in both the US and the other country) are beneficiaries. For example the US happens to be an enormous exporter of luxury cars, especially to countries like China, although this isn’t something that turns up in the news much because the exported cars largely sport BMW and Mercedes badges, but the plants building those cars are no doubt quite influential amongst the Republican senators and representatives of Alabama and South Carolina.