Who’s better for the auto industry?
This election year is, to put it mildly, quite insane.
But at Motor1, the concern is wrapped around what the results might bring to the auto industry. Would a Trump presidency or Clinton presidency be better for cars in general? Will there be mandates to fill the roads with electric vehicles, will crony capitalism – government sponsored cash giveaways – rear its ugly head in a good way or a bad one? (It’s going to be there, so accept it.)
As for the candidates: First, there’s really not much consideration for Republican nominee Donald Trump. His self-immolation of a campaign may very well bring down the Republican Party in the Senate and possibly the House. While it’s still too early to read much into polling numbers, election numbers guru Nate Silver gives him a mere 15.3 percent chance of winning today. Those odds may increase to one in four by November.
If he did win, the auto industry may be only one of many problems facing America. If you are Facebook friends with even a single Clinton supporter, you already know that a Trump presidency will bring the world to an end, the pits of Hell will open up along Pennsylvania Avenue, and we’ll all burn. Every last one of us.
The good news: He’s not going to win, so there’s really not much reason to waste much more space on him. Plus, it’s too difficult to figure out where he stands on any particular issue. He’s for it until he’s against it and then later he’s for it.
So that leaves us with President Hillary Clinton come January and what she has campaigned on regarding the auto industry. For instance, she said in her acceptance speech in July that carmakers “had their best year ever.” Sorta, kinda. Volume was up, for sure. Profits are higher, definitely. But those numbers are not likely to hold. And they definitely won’t hold if Clinton actually does what she promises to do.
It’s too difficult to figure out where Trump stands on any particular issue.
First, she has said repeatedly – well, she started repeating this after losing Michigan in the Democratic primary – that she was going to go ahead and rewrite the North American Free Trade Agreement. Then again, when President Barack Obama was candidate Obama, he said the same thing. Nearly eight years later, his pen still has all of its ink.
And to be clear, NAFTA has been good for carmakers and consumers. Yes, factory jobs have shifted out of the U.S. to Canada and Mexico. One report by the Wharton School of Business marking the 20th anniversary of NAFTA in 2014 said that as many as 40 percent of all auto industry workers could be located in Mexico by now. I don’t think this is necessarily a bad thing.
Trade agreements are very complicated deals, which is most likely why Obama has never really renegotiated anything. Trade between countries tends to benefit both countries. NAFTA has. Additionally, many jobs back home may have never materialized in America were it not for NAFTA.
Don’t take my word for it.
“A lot of jobs were created in the U.S. that wouldn’t be there without trade with Mexico,” stated Mauro Guillen, Wharton management professor. Furthermore, the report suggests that many of the factory jobs that went to Mexico would have gone somewhere else had there been no NAFTA.
So Clinton can promise away, but most likely she will never really do anything with NAFTA. She says she will, but just look at it as her attempting to appease the unions and once she wins, she’ll be busy with other stuff.
Clinton can promise away, but most likely she will never really do anything with NAFTA.
Most likely, she’ll be talking about the Trans Pacific Partnership, the quasi-controversial trade deal involving 12 countries along the Pacific Rim. Clinton was once the biggest booster for the plan but has since backed away. But if you think labor is cheap in Mexico, try the Philippines, Thailand, Chile, or Peru. It’s also possible that Clinton will have little to say about the TPP if Congress passes it during the lame-duck session and Obama signs it into law. That’s what a betting person should wager.
That could very well mean even cheaper vehicles for consumers, though the savings rarely make it all the way back to us.
According to the U.S. International Trade Administration, part of the TPP includes ending exorbitant tariffs on vehicles the U.S. ships and receives. Japan will drop its tariffs. The U.S. will phase out its fees as well for member countries. This could be great for small pickup buyers as the international Ford Ranger could return on the next boat. So could the Toyota Hilux. But no one has said that would happen, yet.
While the plan sounds great for American carmakers, perhaps the only big winner in that will be Tesla, which is a car people around the world want. A Ford Super Duty is not going to fit anywhere in Vietnam. Neither is a GMC Yukon Denali. People may want them, but it wasn’t really the tariff that kept them off the road. Sure, some will sell there. But not more than a single dealership in Biloxi, Mississippi, sells annually.
It’s more likely we’ll see more Harley Davidsons and Indian Motorcycles sold instead, as motorbikes are included in the TPP with lower tariffs.
Gas prices will likely start to go up the first Wednesday in November, that tends to happen with every presidential election.
Additionally, there’s a lot to address concerning auto parts, which could replace Chinese parts, but, again, it might add a few jobs, but not that many.
Outside of the trade deals, it remains to be seen what President Clinton will do to help the auto industry. There are potential tax breaks for electric vehicles given to both consumers and carmakers. Extending that program beyond 2018 seems like a given. There are carbon cap-and-trade programs devised to save us from global warming, which, I imagine carmakers are not particular fans of having implemented. I see that one never happening.
Then there is something that all of us would like to see: A big investment in our roads. Let’s campaign for a pothole-free America. A place where we can confidently ride on low-profile, high-performance tires from sea to shining sea.
And low gas prices. Gas prices will likely start to go up the first Wednesday in November, that tends to happen with every presidential election.
We may like to think our president is all-powerful and all-knowing. We like to think their impact is much bigger than it really it is. Yes, the president is still important, but he has never really been quite as influential as supporters and detractors like to make us think he has been, and neither will she.