By on February 28, 2017

GM Adds Third Shift, 750 Jobs at Wentzville Assembly

In the international poker game of NAFTA re-negotiations, U.S. President Donald Trump should not assume his Mexican opponent will be playing with a losing hand, an auto industry expert says.

“I’m going to be surprised if we see a heck of a lot changed,” said John Holmes, researcher at the Automotive Policy Research Centre at McMaster University in Hamilton, Ont. “The industry now is so highly integrated.”

Although the U.S. is a global political and economic giant, Mexico has emerged as an auto-producing power house, ranking seventh among vehicle-producing countries and is home to at least six major car makers, including the Detroit Three.

Talks among NAFTA’s three signatories — the United States, Mexico and Canada — aren’t expected to begin until sometime in June, but saber rattling between Trump and key Mexican government officials has kicked into high gear. Amid Trump’s threat to not only scrap the 23-year-old trade deal but impose a 20-per-cent import tax on Mexican-made vehicles entering the U.S., Mexico’s economy minister recently issued a threat of his own.

“The moment they say ‘We’re going to put a 20-per-cent tariff on cars,’ I get up from the table,” Ildefonso Guajardo told Bloomberg on Monday.

Mexico’s threat to scuttle talks to revamp the North American Free Trade Agreement should not be taken lightly, said Holmes. However, America’s southern trading partner holds at least one powerful bargaining chip: the integrated nature of the North American auto industry that has evolved under NAFTA.

“If the US. administration really moved to cut off imported vehicles from Mexico by significantly changing tariff structure in NAFTA or content rules of origin, at the moments it’s difficult to see how they would actually replace the loss of vehicle imports with domestic production,” he said.

“If you look at U.S. assembly plants at the moment, they’re all working at or above capacity. So there’s no spare capacity there. It usually takes at least three or four years to plan and get a new assembly plant up and running. From Mexico’s point of view, how does the U.S. actually significantly cut off the low of vehicles from Mexico? I don’t think you can do that easily in a short time period.”

Mexico’s other bargaining chip is the fact that many vehicles assembled in that country contain “a fairly significant proportion of parts made in the U.S.,” said Holmes. “There’s potentially a loss of jobs in the U.S. because of loss of parts production.”

In fact, a study by the Center for Automotive Research in Ann Arbor, Michigan noted that U.S. content in vehicles from Mexico soared from five percent before NAFTA to 40 percent today.

“U.S. suppliers have benefited from increased automotive assembly capacity throughout North america,” the CAR study said. Scrapping NAFTA and imposing tariffs on vehicle imports would cause prices to jump, sales to fall and the loss of at least 35,000 U.S. manufacturing jobs, CAR warned.

“Any move by the United States to withdraw from NAFTA or to otherwise restrict automotive vehicles parts and components trade within North America will result in higher costs to producers, lower returns for investors, fewer choices for consumers and a less competitive U.S. automotive and supplier industry,” the study said.

The U.S. push for new trade rules won’t spell the end of Mexico’s auto industry, said Holmes. “What we’re likely to see is that the current footprint for assembly gets frozen in Mexico so there isn’t a lot of new investment in the near future. But I think it will be very difficult to significantly cut back on the imported vehicles from Mexico because it’s a major source of vehicles and parts for the U.S., and that’s where the big trade deficit lies.”

Last year, the U.S. exported 157,500 vehicles to Mexico, while Mexico shipped about 2.1 million vehicles to the U.S., he said. “Clearly Trump has been fairly focused on the auto sector, but I think he’s so uneducated with regards as to how the auto sector actually works in North America,” added Holmes. “I would hope the CEOs of car companies and parts suppliers have been doing a lot of educating and lobbying within the administration in Washington to point out how highly integrated this industry is and works to make North America quite competitive in terms of producing vehicles.”

When Wilbur Ross, Trump’s newly confirmed commerce secretary, faces his Mexican counterpart at the bargaining table, it won’t be a game where winner takes all.

[Image: General Motors]

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62 Comments on “As Trade Battle Looms, Mexico Has a Few Tricks up Its Sleeve...”


  • avatar
    sportyaccordy

    Better to lose with pride than win through compromise. America has become so feckless and impotent in character we’d rather torpedo our economy than “capitulate”. We will see what Wilbur Ross does. Hopefully cooler heads will prevail.

    • 0 avatar
      OldManPants

      “Better to lose with pride than win through compromise.”

      Only if that kills you right then & there.

      And then only for you, not your family who will have to move to a neighborhood with no lawns, only smashed cans and Newport butts.

    • 0 avatar
      DeadWeight

      Mexico has no leverage.

      I’m tired of hearing this refrain.

      It’s wrong, it’s ridiculous, and it’s now OVER.

      No more.

      In any true, full-on trade war with the U.S., which again, I am not wishing for, Mexico would be bludgeoned into a bloody pulp, and probably enter a full-scale depression.

      Mexico is running a 360 billion USD annual trade surplus with the U.S., and its exports to the U.S. coupled with remittances from Mexicans working within the U.S. probably constitute 30% of its GDP.

      This is not jingoistic patriotism. I have no interest in such things.

      This is a math equation

      • 0 avatar
        Big Al From 'Murica

        Take your facts and maths somewhere else!

      • 0 avatar
        Big Al from Oz

        Deadweight,
        Even if the US wins a trade war with Mexico the US will need to source the short fall in trade. This will most likely come at a higher price.

        As the US attempts to remove competition it reduces competition. Supply and demand doctates higher prices and less innovation.

        So, the US loses.

        • 0 avatar
          TDIandThen....

          In terms of math – well arithmetic actually – I have to think the total value loss in absolute dollars to the US economy will be higher to the US than to the Mexican economy. The difficulty to Mexico is that it would be a much higher percentage of their GDP, i.e. it would hurt more. Still, suffering is suffering and the Trumpettes are lots of it for Americans who lose their jobs as well as for Mexicans.

          And on the other side of the scale, there’s votes and winning an election.

          Screw the country. Well done Trump.

      • 0 avatar
        Bazza

        Fact. Mexico may have “tricks”, but no pimp hand. The hand-wringing and clucking of hens has no bearing on how this will play out.

  • avatar
    Big Al from Oz

    I think this is ironic.

    A 20% TACO TAX on Mexican made full size pickups.

    I read another article that Trump and Bannon should investigate. A tax levied on robotic production. Not that it makes sense.

    How about a tax levied on anything that is more productive and competitive? A tractor tax? An escavator tax. How many jobs have been lost to machinery?

    People are like equipment. If they are cheaper to manage as a resource so be it.

    Why doesn’t America educate its workforce relative to its GDP? Then maybe each worker would be more productive. Why is America trying to compete with low skilled workforces?

    What needs to occur is robotics/AI be introduced with a lift in a more flexible and able workforce in the US.

    But hey, my American brothers that requires effort and risk and the best minds from around the world. This is what made America Great initially. Not this fear and the arrogance I read on TTAC.

    Australian’s coined a term “having a go”.

    Have a fncking go and stop snivelling.

    • 0 avatar
      sportyaccordy

      Much agreed. We’ll never be great again if we refuse to compete, or only compete with the cheapest labor pools the world has to offer.

    • 0 avatar
      FreedMike

      “Why doesn’t America educate its workforce relative to its GDP?”

      Four reasons:
      1) It costs more tax money.
      2) It costs more tax money.
      3) It costs more tax money.
      4) It costs more tax money.

      • 0 avatar
        OldManPants

        It’s also tough to manage serial incarceration/maternity leave for middle-schoolers. Tends to be disruptive of planned curricula.

      • 0 avatar
        Charliej

        Americans hate to pay for anything. They think buying cheap Chinese junk from Walmart is smart because it is cheap. They don’t realize that they will be buying it again soon because it is was and always will be junk. Americans are also too stupid to understand that education does not cost, it pays for itself many times over. Today’s children will be tomorrows workers. Do you want your bank tellers to be educated? Do you want your food workers to be educated? Do you want your health care workers to be educated? I certainly do and you should too. Educated workers make more money and pay more taxes. These are the workers I want paying into social security to keep supporting me, and you when you retire.

        • 0 avatar
          FreedMike

          An illustrative story, Charlie…

          I live in Denver, which has long struggled with a freeway system designed back in the ’50s, when about 700,000 people lived here. Today, about 3 million people live in the metro are, and the highways are a joke. None was worse than I-25, which for many years was as bad as anything you’d find in, say, L.A.

          So, the state decided to ask voters to fix it. They proposed a state tax increase to do it. Voters, in a pique of anti-tax anger, flipped the bird at the proposal, and made the state finance it with bonds instead. That way, instead of a temporary tax increase of something like $70 for a couple of years, we can pay interest on the bonds from our tax dollars until the year 2363 or so. Brilliant.

          But that same year, the same voters who went ballistic about spending tax money on highways approved a tax increase…for a new stadium for the Broncos. Guess where the stadium is? It’s right off the absolute worst stretch of I-25, which voters originally told the state they wouldn’t pay to fix.

          Flash forward to present day, and we need TONS of work on all the highways around the city. And once again, voters have told the state to f**k off. So what’s the solution? Add one “Lexus lane” to each of the highways that desperately needs widening. So, instead of I-70 being eight lanes wide (which it needs to be), it’ll be six lanes, with two “tolled” lanes. And who collects the tolls? A foreign company, which can raise tolls whenever it feels like it, and doesn’t need voter approval to do so. And this arrangement continues in perpetuity.

          But, hey, our state tax bill won’t go up. Yippee.

          Same stupid thinking persists when it comes to education. Voters in my county will go into full torches-and-pitchforks mode when asked for a mill levy increase, and then they whine when the district starts charging for the kids to ride the bus to school. Personally, I think the next time ’round, the district should threaten to cut something like varsity football. That’ll guarantee ’em a win.

          And we wonder why the country’s in the state it’s in.

          • 0 avatar
            CaddyDaddy

            Freed Mike, as a Front Ranger who is glad to live north of the crooked RTD taxing district, I agree with you about the lack of highway funding and low tax revenue steered toward highways in the Centennial State.

            Taking a page from NPR, you have become skilled at telling a good story, however it’s just 1/2 the story.

            The real reason why voters in CO will not approve increased highway taxes is that they really are “transportation” taxes. FASTER and fuel tax fees leave a bad taste in our red County mouths because that revenue gets allocated to boondoggle light rail projects ( Train to the Plane) and exercise paths up Vail pass etc….. Monies are allocated to the projects built by cronies of the politicians. If you never repair the roads, then there iis always a reason to sell a sob story for more taxes.

            Thank god for TABOR!

            When a ballot issue is proposed that is a road only bill, it will pass. Also, in Colorado we don’t have Freeways. But I appreciate your thoughts and the discussion.

          • 0 avatar
            FreedMike

            Well, Caddy, people are upset about FASTER, but the reason why it was put in place is simple: voters won’t approve any tax increases for roads. Think a statewide ballot measure to, say, widen I-70 through the mountains (which is DESPERATELY needed) would pass? I disagree. It’d pass in parts of the Denver metro, Boulder, Pueblo, Fort Collins, and all of the mountain areas served by I-70, and fail epically everywhere else. Why? Because folks in places like Weld County or the plains would say “it doesn’t affect me so I’m not paying for,” and folks in Colorado Springs would say “it’s a tax, so it’s the spawn of Satan, and besides I’m not paying for a bunch of effete coastal liberal elites to jet into Denver and go skiing.”

            Thus, we have to get ripped off on things like car registration fees through FASTER. I’m among them. I just got soaked for almost five hundred bucks to register my new $18,000 Volkswagen. It’s ridiculous. But it’s how transportation related stuff gets funded in this state. There’s no such thing as a free ride. You pay your taxes up front or you pay them on the back end.

            And stuff like light rail might seem like “boondoggles” to folks in the rural areas, but sorry, folks…the overwhelming majority of this state lives in the Denver area, and we use mass transit here. A lot. And we need a lot more of it – or we need a lot more new highways, which will be ruinously expensive. It cost upwards of a billion bucks to simply widen I-25 through the southern part of Denver, and that was ten years ago. How much would, say, adding a whole new highway cost given the ridiculous property values in Denver? The mind boggles. So, we need more transit. Again, pay your money and take your pick, y’know?

            On the other hand, the rural folks in Colorado (read: eastern plains) could take a look over the Kansas border to see how that particular rural red state’s doing. Being conservatives, I’m sure they’d cut their taxes to the bone in a nanosecond. And I understand why. But they should look over the border into Kansas, which has tax-cut itself into Palookaville, and even the state’s Republicans know it. Without all the revenue generated here in Denver metro and the ski areas, that’s where the eastern plains folks would be too. People in the “red counties” need Denver. That means they gotta fund what we need. Sucks, but it’s true.

          • 0 avatar
            quasimondo

            It worked in Louisiana. Look how quickly the state ponied up the money to keep LSU funded after they found out that they might have to cancel their football season.

          • 0 avatar
            kvndoom

            “600 million on a football team, and her baby died just like a dope fiend.”

            -2Short

        • 0 avatar
          OldManPants

          Charlie bails on his own country, lives in a fishing village, and now he’s giving lectures?

          • 0 avatar
            Charliej

            Just because I am retired in Mexico does not mean that I am stupid or that I do not care about my country. My son and grand children have to live in the US and be exposed to the stupidity there. Also, everything that I said is true. Not liking the message does not make it false. If the US does not start better educating it’s children, the country is doomed.

          • 0 avatar
            OldManPants

            You also claimed to have renounced your citizenship. That’s a little more than just retiring.

        • 0 avatar
          Big Al from Oz

          Charliej,
          China doesn’t really produce junk anymore than the US for the consumer market.

          So, how smart is it to pay much more for a similar quality product?

      • 0 avatar
        Lou_BC

        We have a large number of angry people fearing for their futures. The humiliation of unemployment also causes that anger. It is unfortunate that politicians fuel that anger and misdirect people to blame foreigners.

        Education is the best way to keep people in the workforce. That education can be Post-Secondary or skilled Trades. You can’t force the return of “unskilled” labour.

        • 0 avatar
          Big Al from Oz

          Lou,
          In the longer term we will see a rise in low skilled workers umemployed with a corresponding increase in the number of semi and skilled workers. The transition to robotics and AI will cause this, not Mexico or China. Yet China appears to be managing this change better than the US. China has lost 30 million manufacturing jobs in less than a decade. Who caused this? The US?

          The changes I initially spoke of occurred during the last phase of industrialisation. The most significant outcome from the last phase of industrialisation was the rapid increase in college and university qualified workers. Prior to this most workers were artisans who specialised in small areas. Hence the ease at which those jobs were converted into mass production.

          There was a lull from the 20s until WWII as economies converted. Europe was slow to adapt, plus a couple of significant wars retarded change along with a similar attitude the US now exhibits. The Europeans fell behind and the US profited.

          Every nation is encountering the same issues as the US in relation to our economies.

          So, finger pointing and blaming others highlights the irrational fear.

          Change is occurring and I do believe the US is to “blame” more than others for the consumeristic world in which we live.

          I’m excited about the future. We must take risk and build the new world. If we don’t it will take the US a century to catch up like the Europeans.

          • 0 avatar
            Lou_BC

            Unfortunately too many people are choosing isolational Nationalism along xenophobic lines. We saw that in Jack’s article about oil changes where he brought up immigration as the root cause of loss of work ethic.
            That is highly typical of the demographic that supports current US politics. People deny racism or xenophobia but fear the loss of culture due to immigration and fear job loss along those same lines.

          • 0 avatar
            FreedMike

            “We saw that in Jack’s article about oil changes where he brought up immigration as the root cause of loss of work ethic.”

            …ah, memories…

  • avatar
    slavuta

    “Last year, the U.S. exported 157,500 vehicles to Mexico, while Mexico shipped about 2.1 million vehicles to the U.S.”

    Why even bother with trade agreements? Consumer has all the power. don’t buy cars made in Mexico and manufacturers will soon realize that people don’t want them. They will move to US and we will not need these discussions. If you support Trump and driving Fusion you are like most politicians, only talking and not doing anything about. Buy Camry – speak for America!

    • 0 avatar
      Big Al from Oz

      There is far more to trade than the auto industry.

    • 0 avatar
      threeer

      There is a trifecta when it comes to our deficits:
      1) Government. Sets trade rules/laws and taxes (generalities, but you basically get it)
      2) Corporations. Operating to make as much profit as possible.
      3) Consumers. Ultimate “voting” card. Each dollar we spend on a good is a “vote” for where it is made, and if we accept that origin.

      While Government and Corporations play their roles, I truly believe that we as consumers hold the ultimate “trump” card (sorry, couldn’t resist) when it comes to accepting where goods are made. I vote every day and read labels to do the best I can to buy as much American-made product as possible. I have my reasons and won’t go into a lengthy discourse to defend them. We collectively go ourselves into this mess, and only we can collectively get ourselves out of it. I understand that not every manufacturing job we lost to Mexico/China/etc…will come back, but I do believe that a fairly substantial number of them can. I also understand that we need to work to sharpen our training so we have higher-skilled workers, but also understand that there will always be a need for some work that does not require a college-level education. We shouldn’t be racing to the bottom, but we’ve been at the losing end of many trade deals and I’d personally like to see us grow a pair and recover some of that lost potential. NAFTA was like flipping a switch when it come to our trade balance with Mexico. Never mind how much we’re being tossed around when it comes to trade with the Chinese.
      It will be interesting to see what, if anything, comes out of the talk about renegotiating these deals.

  • avatar
    tresmonos

    I hope our economy tanks and everyone is forced to buy $100 dollar pairs of US milled jeans. Or better yet, they still buy their cheap Levi’s but for $75 and overpay for some POS because America is stupid and we all want everything now the way God intended it for free and with my simple vote I’ll change the world!

    Bill Burr really speaks the truth. We need to cull the herd. Every presidential election exposes just how f*cking stupid both sides truly are.

    More mothers need to swallow their kids or hit Cntrl+Alt+Del. I cringe every time I see some bad genetics perpetuate. I hope to god I got some [email protected] running around in Mexico that will benefit from Trump being a moron.

    • 0 avatar
      brettc

      Haha, swallow their kids. I’m going to start using that. I feel bad for kids that are in U.S. public schoolz with a Secretary of Education that’s never taught a day in her life.

  • avatar
    agent534

    NAFTA lead to a loss of 600,000 USA manufacturing jobs to Estados Unidos Mexicanos, 35,000 short term losses is small compared to return potential. Annually, 15k net jobs a year are lost in the USA.
    Furthermore, the Mexican domestic market for cars is small compared to the USA. We are talking 18mil annual in the USA to 1mil annual in Mexico. Access to the US market is far more important.

    The fault in the perspective here is the focus on “U.S. suppliers” and not USA’s workers. Trump’s support of workers is equal to Bernie’s Sanders. Trump has pledged “I Will Not Surrender America To The “False Song Of Globalism” and part of that is not putting corporate interests ahead of what is in the bests of worker in the US of A.

    • 0 avatar
      Big Al from Oz

      Bullsh!t Agent. How many of the jobs were lost to automation?

      Why doesn’t the US automate more?

      The US doesn’t have enough correctly trained people to expand manufacturing as Trump wants.

      Trump is a populist talking nonsense to appease those who fear, fear.

      This will be another Trump fail.

      Where are the workers coming from for these new manufacturing jobs? Worker qualified for the future?

      All Trump will do is increase the cost of living for Americans, who will produce product of the similar quality as Mexican or Chinese product. That is the benchmark that has been set. Remember most Mexican product is built by the same multinationals that operate in the US.

      Even Thailand produces better quality cars than the Big 3 or on par or better than the foreign manufacturers in the US. Thai workers earn far less than Mexican workers. Mexico is pressured by Thailand.

      This is called competition.

      • 0 avatar
        agent534

        @misinformed Al,

        Productivity increases are nothing new, and in the past have lead to increased wages. This was decoupled when freed trade was used to transfer labor to areas where workers have no leverage.
        Automation is not anything new, and the type of automation we are looking at now transfers the need from low skilled workers to high skilled workers further putting developing nations with a low skilled work forces at a disadvantage, encouraging the return of jobs to the USA. Again, this is not new, it was just undermined by free traders for a time, but that time has passed.

        Undoing the forces encouraging wage stagnation in the USA will absolutely increase the standard of living for workers in the USA.

        Thankfully Trump already killed the TPP, so workers in the USA will not be forced to compete on a cost basis with workers from Thailand who have little to no control of their quality of life or the value of their labor.

        PS- worst place in the world I was ever stuck was Pattaya, Thailand, after I missed a ferry. God I hope we are not using quality of life in Thailand to level set where we all should be.

        • 0 avatar
          Big Al from Oz

          Supply and demand dictate income.

          As humans confront more competition from robotics and AI wages will stagnate and business will profit from productivity gains via robotics.

          This will impact areas other than manufacturing as workers are moving across skills into other areas increasing competition in non manufacturing jobs.

    • 0 avatar
      Lou_BC

      “Specifically within NAFTA’s first five years of existence, 709,988 jobs (140,000 annually), were created domestically”
      Yes, there has been a loss of *unskilled* manufacturing jobs but 85% is automation. That would mean 90,000 lost jobs due to offshoring and 510,000 due to robots.

      “I Will Not Surrender America To The “False Song Of Globalism”

      Unfettered nationalism is never good. I’d cite examples but don’t want to invoke Godwin’s law.

      • 0 avatar
        agent534

        @Lou_BC automation does not equal job loss, the other 1/2 of automation is that the need for low skilled workers turns to demand for high skilled workers. This puts the developed world at an advantage vs the undeveloped. Bring on the automation, it will only help labor in the USA!

        ” A 2014 PIIE study of NAFTA’s effects found that about 15,000 jobs on net are lost each year due to the pact”

        • 0 avatar
          Big Al from Oz

          The US isn’t adapting to this change equally to other countries.

        • 0 avatar
          Lou_BC

          @agent534 – the sources I looked at state a net positive gain due to NAFTA but there are other sources that say both sides are wrong and the overall net gain or loss in the USA has been marginal. They say that NAFTA has helped in some areas and has made things worse in others.

          A lot of problems we see know are due to the focus upon short term financial gains. Everyone is too focused upon making quick money on stocks. That unfortunately has a huge effect on how economies run and is destabilizing to those without the means to cope with those kind of market/economic swings.

          • 0 avatar
            agent534

            @Lou_BC
            I’m taking the CFR’s NAFTA Impact as my jumping off point-_http://www.cfr.org/trade/naftas-economic-impact/p15790

            Even then they say GDP increase is only .5% vs that 15k net job loss they cite.

            @Al, that is the source for my ‘baseless comment centred on fear’, the group that produced a paper calling for one North American Currency, the ‘Amero’ Are a fear mongering anti trade group?

        • 0 avatar
          Big Al from Oz

          Agent,
          Another baseless comment centred on fear.

          Here’s a true story;
          You know those little cameras on everthing from smartphones, tablets, laptops, reversing cameras, security cameras, drones and on and on.

          Where do you think most of them come from? China? No, they used to come from China with a factory of thousands of workers.

          Most (I read over 90%) come from a factory in Sydney, Australia. 14 techs run the factory floor. Yes 14.

          China lost thousands of jobs.

          Another story;
          Adidas has been manufacturing its sport shoes in Vietnam, Indonesia and China.

          Adidas will have two fully robotic factories to manufacture its shoes. One in Germany and one in the US. With only a few hundred workers.

          How many thousands of jobs have been lost in the Asian countries?

          Oh, the unit price per shoe has dropped. With robotics its that competitive that transprt costs are significant, henece the US and Germany are now producers of a product that was left to the poorest of poor nations.

          Look at the agri industry. Wealthy nations can produce food more competitively that low income nations.

          Manufacturing will go the same way.

          3D printing will become a major manufacturing model as well.

          The difference now is the UU is only a small part compared to 60 years ago.

          • 0 avatar
            agent534

            @Al

            You just made my point. Adidas is hiring 160 high skilled workers at there factory in the USA and there are plans to open a 2nd one shortly. Currently this is profitable in part due to existing tariffs on shoe imports from Asia, which would have been removed if TPP passed.
            New Balance who operates 5 factories in New England fought TPP as if tariffs were removed, they too would have to move all of their production over seas.
            Fortunately TPP is dead, New Balance continues to produce shoes in New England, and the tariffs help make it worth wile for Adidas to expand manufacturing operations in the USA, with high skilled labor.

          • 0 avatar
            Big Al from Oz

            Agent,
            It is technology that made it possible to compete. Not a tariff.

            I have a similar view wth the chicken tax.

            I’m against anti-competitive behaviour. This is counter productive and costs jobs in the longer term.

    • 0 avatar
      FreedMike

      I’d say Trump’s “support” of workers began in the campaign and ended when they pulled the ballot lever for him. Why? Because it’s short-sighted. “Bringing back jobs” is great, but it’ll also bring higher prices, and who’s going to be hit hardest? The workers who pulled the lever for him, that’s who.

      And with the ex-head of Exxon three heartbeats away from the presidency, where you do think gas prices are heading? Who does that hurt disproportionately? Again, it’s the workers who pulled the lever for Trump.

      And then there’s this: once all the manufacturing jobs in Mexico “come home,” what do the Mexicans who lose their jobs do? They try to come here illegally. Who does that p*ss off disproportionately? It’s the workers who pulled the lever for Trump.

      Simplistic campaign slogans are easy. Actual, constructive change is far more difficult.

      • 0 avatar
        slavuta

        “once all the manufacturing jobs in Mexico “come home,” what do the Mexicans who lose their jobs do?”

        and if jobs don’t come home, what all the Syrian refugees will do?

        • 0 avatar
          agent534

          @slavuta did you know there are Syrian Peace Talks going on right now in Geneva? And the news isn’t covering this for some reason 1/2 as much as they should, and USA politicians aren’t driving participation maybe because Russians, maybe because they don’t want to see Trump reach a political solution vs the last administrations chosen policy which was flood the country with arms and incite the death of over 500k.

          Regardless, the lack of a strong US presence in Geneva is troubling as is the lack of news coverage.

          UN Statement from the talks: _http://www.un.org/apps/news/story.asp?NewsID=56232

          • 0 avatar
            FreedMike

            @agent:
            “@slavuta did you know there are Syrian Peace Talks going on right now in Geneva? And the news isn’t covering this…”

            News isn’t covering it? Nonsense. See below. Stop buying into the anti-media hate.

            http://www.cnn.com/2017/02/19/middleeast/syria-ceasefire-un-peace-talks/

            https://www.washingtonpost.com/world/middle_east/syrian-peace-talks-flounder-as-participants-ask-where-is-america/2017/02/28/a642a61a-fdd9-11e6-99b4-9e613afeb09f_story.html?utm_term=.675effbe2810

            http://www.cbsnews.com/news/syria-peace-talks-geneva-assad-united-nations/

            And by the way, if this isn’t making the front page, maybe it’s because…the United States isn’t taking part in the talks. Now, who’s to blame for that?

            Oh, I forgot…that’s the media’s fault. Or Obama’s. Or the paid protesters. So many straw men to choose from…

          • 0 avatar
            agent534

            @FreedMike
            It is just what I said- ‘And the news isn’t covering this for some reason 1/2 as much as they should’

            Nice job trying to cut my quote short.

            Anyone can google the articles if they know what to look for. Does CNN even have the talks on their middle east page?
            http://www.cnn.com/middle-east
            Clearly no.

  • avatar
    orenwolf

    Great, informative article. We need more of these well researched articles on TTAC! Thanks!

  • avatar
    seth1065

    I do not see how Trump can win this, if he makes a 20% traffic Mexico goes to the WTO ( world trade Org) and by agreement only a 3% is allowed to be added ( per yesterdays article at TTAC) and if we want our car production back, what about suppliers who set up shop in Mexico. Also Mexico buys a lot of food stuffs from US farms and payback is a bitch, I doubt the farmers would be to happy not having ready labor and a ready markets because we now want out of a agreement we sign for.

    • 0 avatar
      agent534

      Guess what Trump thinks of the WTO?

      http://fortune.com/2016/07/25/donald-trump-free-trade-wto/

      When told that such tariffs would probably be rejected by the WTO, Trump answered, “It doesn’t matter.”

      “Then we’re going to renegotiate or we’re going to pull out,” he said. “These trade deals are a disaster, Chuck. The World Trade Organization is a disaster.”

      • 0 avatar
        seth1065

        agent 534,
        If Trump decides to bolt the WTO , he has just opened the US to more cheap steel, something he knows about because he bought plenty for his real estate, the US uses the WTO to keep a level playing field as much as one can. I think , but do not know if he has the power to pull out but if he does I only see the US losing as a whole. We have to read w somebody and if the US does 20% you have to assume our trading partners will do 20% as well.

        I think he is learning as many Pres have that these things do matter, ( the WTO in this example)he can not will his way to do as he wants, as a example see Obama care, the REP have had many years to find a way to replace it, trump said day one he would repel it, yesterday he said it is complicated and still no real plan to fix it, repel it, change it.

    • 0 avatar
      Lou_BC

      Eventually things will get settled by the WTO but that takes a significant amount of time. Canada has been to that dance with softwood lumber tariffs. We’ve won every time at the WTO but the 800 pound gorilla doesn’t want to loose perceived control of its banana’s.

      • 0 avatar
        Big Al from Oz

        Lou,
        I think you are very correct about the US wanting more control over trade.

        As large as the US economy is, it has reduced its size proportionally (massively) as scores of other nations have advanced.

        This poses itself as a problem for the US government and the psyche of the people in the US. People who voted Trump in have this black and white nostalgic view of the USes past.

        For the US to remain influential the people and government must realise the country is no different than any other country in the world.

        Trump is not in a position to dictate. He must realise a consensus is needed between the US and others. This is called leadeship.

        Somehow I don’t think all around Trump will allow him to completely destroy the USes position.

        What Trump has done so far is to show the world his selfishness. Countries including Mexico and China will diversify more leaving the US out. This is not a good position economically for the US.

        Global trade will continue with or without the US, at the expense of the US. Anything and everything can be had without the US.

        Trump has let the US down.

  • avatar
    Marcus36

    Mexico is the second biggest consumer in the world of US manufactured goods and services, you can run a multi billion company or a lemonade stand….if you piss off your second biggest customer the effect will be the same for you as a supplier.

  • avatar
    Big Al From 'Murica

    Why do discussions like this happen in a vacuum. I believe corporate tax reform would be part of making us competetive. We are very high in relation to the developed world. Let’s make it make sense for businesses to come back and with them bring skilled jobs, not just manufacturing. We need to fix education, particularly in poor areas, but there needs to be employers here.

    • 0 avatar
      Lou_BC

      Big Al From ‘Murica – agreed. There are multiple factors affecting jobs, profits, and trade. Education is a major issue.

    • 0 avatar
      Big Al from Oz

      L’il Al,
      It us a little more complex than just reducing taxation.

      Look at it this way;
      Companies that want to manufacture will manufacture where the cost of manufacturing can be written off, thus transferring the burden of manufacturing to what ever country, state, city/county.

      The financial side of the business is better off where taxes are lowest on earnings.

      If business tax is reduced a largrr share of subsidies, handouts, regulatory/technical, outright protectionist tariffs, etc must be forfeited to increase competition and reduce the burden on the taxpayer/consumer.

      Just reducing taxes will send the US broke. Infrasttucture to support a modern and competitive economy must be had. So, the onus of funding basic essentials for a modern still need to ve paid for.

      The US like most other OECD economies the US needs to balance this. Or prices and the cost of living will rise to pay for running of the country.

      • 0 avatar
        Big Al From 'Murica

        I agree with all of that, but I think our balance is shifted too far towards the tax side. Our corporate income taxes are high when compared to the developed world, really high. But even that should be taken as a part of our entire taxation system. I don’t know where we rank globally there.

        I don’t have any beef reducing corporate subsidies in kind. I think they should be really limited cases where there is a compelling national interest (large infrastructure projects, space exploration, things like that).

        With respect to education however global results say we should be better given our per pupil expenditures. The status quo is not working. When compared to some places, like China for example we have some disadvantages by our nature. We don’t “weed out” kids for example (not by design anyway though in practice your zip code can weed you out). There are no high stakes tests that put kids on a “factory worker” track for example. We believe everyone should be able to choose their own destiny and that philisophy makes for a less efficient use of resources. I am OK with that but we need to account for it.

  • avatar
    Big Al From 'Murica

    And yes, Mexico has some leverage but like I said, nothing happens in a vacuum. I saw it commented in another thread…what if we got real serious about stopping drugs and made life hard on the cartels. What if we got serious about the border. We have some tricks as well.

  • avatar
    Jeff S

    Yes China is capable of making better quality products but China will make products to a price point to get the contract from the American companies seeking the cheapest price. There is a point where you can make something only so cheap that it is virtually unusable. I think you need to use your own judgement whenever you buy something. Somethings you do not want something to last as long and it can be more economical to throw out and replace. Other items you buy that you need to hold up to the stress and then it is better to not buy the cheapest. That is why Harbor Freight exists is you want cheap tools that you don’t care will last but if you need tools that will stand up to the test then you will want to pay more for better quality. Sometimes buying the most expensive item will not guarantee its quality or longevity. Experience and common sense can be the best determinates as to what is best and that can vary upon what your usage is.

  • avatar
    DenverMike

    Endless unintended consequences. When displaced Mexico workers show up in the US, sorry the all the sh!t shoveling jobs were replace by Honda Robots (made by robots themselves).

    Lost Mexico jobs don’t have to come home to the US, they just have to leave Mexico.

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