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.”