What Does Trump's Win Mean for the Auto Sector?

Steph Willems
by Steph Willems
what does trump s win mean for the auto sector

That sound you hear — besides that of pollsters hastily preparing new career paths — is the American automobile industry collectively holding its breath.

Donald Trump’s move from presidential candidate to president-elect, largely the result of disaffected voters in traditional manufacturing hot spots (though a nationwide movement to shake up D.C. can’t be ignored), could spell a tumultuous near future for automakers.

“May you live in interesting times,” the saying goes. How interesting remains to be seen.

Trump spent much of his campaign railing against the move of automobile manufacturing to lost-cost jurisdictions, Mexico specifically. He sparred with Ford CEO Mark Fields, singling out that automaker for its pledge to move small car production south of the border — a practice favored by numerous companies, including all members of the Detroit Three.

During his campaign kickoff, Trump threatened Ford with a 35-percent tariff on parts and vehicles imported from Mexico. Other automakers likely sat up and took notice of that threat. He’s also vowed to repeal the North American Free Trade Agreement, which makes the practice easy and profitable for automakers. (Those automakers would counter with a claim that it frees up capacity for higher-profit models, thus keeping the company on solid financial ground and U.S. workers employed.)

Reportedly, Trump and Fields spoke after the Ford CEO fired back at the candidate. It’s safe to say that call probably wasn’t the most relaxed exchange, but Trump’s comments did compel Ford to issue statements claiming its home is, and always will be, the United States.

Now, industry executives wait to see if Trump performs what Britons like to call a “U-turn.”

If Trump fails to flip-flop on his Mexican manufacturing stance, expect higher sticker prices on low-cost vehicles, says Charles Chesbrough, executive director of strategy and research at the Original Equipment Suppliers Association.

“His trade policies could add $5,000 or more to the price of a small car from Mexico,” Chesbrough told Reuters.

It’s true that auto manufacturing is on the rise in Mexico — the country makes up a growing 20-percent slice of North America’s vehicle volume — but repealing NAFTA wouldn’t be a walk in the park.

“Dismantling NAFTA at this point would be pretty hard to do,” Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research, told Reuters.

What’s notable of Trump’s win is the role played by voters in Rust Belt states. Michigan went red for the first time since 1988, while Ohio returned to the Republican fold after two previous Democratic wins. According to exit polling published by Fox News, union households only favored Democratic candidate Hillary Clinton by eight percentage points — a 10-percent drop from 2012. That’s the lowest union support for a Democratic candidate in two decades.

The UAW spent most of last night and this morning congratulating UAW-backed Democratic candidates on Twitter.

In a brief statement posted to UAW.org, union president Dennis Williams said, “The results are in and the American people have spoken. As a nation, it is time for us to once again unite for the common good of our country. We want to thank our members and retirees for their hard work during this democratic process.”

He continued, “It’s obvious there is work to be done. We have high hopes that elected officials heard the American people loud and clear about trade, jobs, education and the inequality in this country.”

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  • Alcolawl Alcolawl on Nov 10, 2016

    Wow. I can practically taste the salt through my computer monitor right now.

  • Zackman Zackman on Nov 10, 2016

    @ gtemnykh: "My made-in-Iowa Maytag dryer (bought used) ..." Best comment of the week. A true TTAC'er, I mean, who buys appliances used? Oh, wait... guilty - just bought a lawn mower for $20. Also, regarding Mansfield, OH - every time I drove up I-71, it's always snowing, at least flurries. BTW, I'm half Russian. I'm politically neutral, too.

    • Gtem Gtem on Nov 10, 2016

      When I bought my built in '42 house this spring, I went lawnmower shopping and lucked into a lightly used several year old self propelled Snapper with a Briggs and Stratton motor (American made) for $125 on craigslist. Runs great, my family has owned a '85 self propelled Snapper since my parents bought their first house in '94, and I think my brother still has a '70 Snapper that he picked up for free from a friend and fixed up with minimal expense. Good mowers! Regretfully mine has a plastic deck, we'll see how it holds up long term.

  • Dukeisduke Only if there's a significant price difference between it and the Lexus GX. Otherwise, no. If they do bring it over, they'll have to ditch that ugly grille.
  • Theflyersfan Chris here just gave me a big old dose of nightmare fuel with this. Let me explain... This past Saturday, driving home after doing some furniture shopping. I-64 Westbound is closed for extensive repairs in my part of Louisville so I had to take surface streets home. No problem as it's basically a straight shot from said furniture store to my domicile. Now, I had that recent spinal fusion surgery in my neck complete with four screws, some plates, artificial bone, and the chance that things might not have healed correctly so things are a bit tender and sore still. Driving home in a part of the area named St. Matthews when I pass a Walgreens. Barreling out of this Walgreens and totally ignoring the stop sign, and situational awareness of ANYTHING around him is a truck, very similar to the one shown above. Same color even. It's a four lane road - main drag through town. I'm in the inside lane and this 7,000 pound monstrosity is suddenly feet from turning an MX-5 into shrapnel. Top is down, had my wits, quickly downshift and manage to do a wild u-turn like move into the oncoming traffic lanes but avoided the hit. The neck, however, didn't like the strain and trauma and sent parts of my body into fits of limited sensations and pain. The truck driver, realizing what he's done suddenly stops. My top is down, windows are down, and we make eye contact as I pull alongside the person I have suddenly wished death on inside a flaming pit. And if I repeat the sentences of what was yelled at that jack***es face, I'll be on insta-ban here in milliseconds. He yells over, "Man, I'm sorry...I didn't see ya!" Well, ***face, learn what a stop sign means and scan the scene first. And get something that you can see over and in front instead of the blind spots that hide everyone under the age of 14 in front of the truck. So, I'm all for forcing these overdone, oversized, overfed, overstyled, guzzling, tiny-genital compensating redneck wannabe road monsters taken out back and put to rest and we return to normalcy. Made it home hurting like hell and tests were done today to check for further injury. And that Mazda can turn and spin on a dime... Try that move in that Sierra AT4XBZQZW8! whatever.
  • Dukeisduke I've read stories about that air suspension system - insanely high pressures, and crazy expensive to repair. I loved the Mark VIII's styling back then, but it definitely hasn't aged well.Also:"Mark VII was the first Mark available with dual front airbags..." Did you mean Mark VIII?
  • Kwik_Shift With qualified AA Californians set to get a million reparation dollars each, Tesla sales should soar then. 😏
  • Dukeisduke Six figures for what's basically a four-wheeled Slingshot? I don't they'll get a lot of takers, at least for on-road use.Does it have ABS or traction control? I imagine it's a snap to break the wheels loose.