Is there such a thing as a Made in America car anymore?
Donald Trump says he wants to see multiple vehicles made in America. It is a useful slogan and once it could have been a practicable idea.
The problem is that there is no longer a car made in America. And there hasn’t been for years.
Since Canada and the United States signed the automatic pact in 1965, car manufacturers have exploited the comparative advantage in both countries to make the industry more competitive, the most efficient production and the most convenient vehicles.
Experts say that the rates will actually nod these advantages almost immediately.
“It is the same absurdity as Trump that it is not supported by scragwork that will hurt [the] The American automotive industry is worse than Canada will damage, “said Flavio Volpe, head of the Auts Parts Manufacturers’ Association (APMA).
A case of study
Any vehicle made in North America is produced through a complex network of interconnected supply chains that use raw materials and parts suppliers that embrace the entire continent.
Consider the rear group of a car made in North America.
That graph was put together by the apma. He says he is based on the actual contracts of his members. The names of the company were drawn up to respect competitive confidentiality.
Each point represents a different society that provides the material or part necessary to complete the rear group.
To further reduce the process, everything begins as a raw material in one country, it is modeled in one part in another, then he moved again to be assembled in a wider component, before being finally assembled and finally sent to a customer.
The rubber is developed in Monterrey, Mexico. It is modeled in a connector in Iowa. That piece is part of the control arm group made in Brampton, Ontario. The control arm is put together as part of the rear suspension group in Detroit. The rear group is sent to Windsor, Ontario, for the final editing and finally sold in California.
The new NAFTA
You could process a similar chain for each single part in any car.
The whole process is feasible only when those components can pass through the boundaries without rates.
This was a key component of the North American free trade agreement in 2018. When it was announced, Trump announced the US-medical agreement with Canadian units signed as a turning point for the American automotive industry.
“Once approved, this will be a new dawn for the American automotive industry and for the American Autoworker,” Trump said in 2018.
Yet, while announced his last tariff save, Trump’s announcement essentially declared his commercial agreement.
“I was also advised that the agreements entered into before the issue of proclamation 9888, such as the revisions of the United States-Korea free exchange agreement and the United States-Mexico-Canada (USMCA) agreement, did not produce sufficient positive results,” wrote the Administration.
But cancel the status quo will arrive with a huge cost.
“No car is truly made in North America alone,” said Patrice Maltais of the Industry Association Global Automkers Canada.
He says that nature on the continent level of the entrance chain of supply cost billions of dollars and used decades to build.
“You practically destroy many of those supply chains and put new ones, and this takes a long time and it takes a lot of money.”
He says that a new production plant could cost from $ 2 billion to $ 10 billion everywhere.
“This is only the plant, so you have to look at all the supply chains for that plant.”
Although the car manufacturers had actually agreed to move production to the United States, it would take years to build.
The rates would have erodes the industry, the experts say
In the meantime, experts say that the industry would be instantaneous from rates.
“You will hear it almost immediately,” said Jan Griffiths, former manager and founder of American Auto of the Gravitas Detroit industrial association.
During a stop of the 4th day campaign in Windsor, Ontario, the liberal leader Mark Carryy announced that if it is elected prime minister, a 2 billion dollar “strategic response fund” will be created to help workers affected by the rates imposed by the President of the United States Donald Trump. The fund would help create a network for all Canadians for the production of automotive components.
Rather than trying to use the rates to force the change that everyone would cost, it says that Trump should offer a practical path for Canada, Mexico and the United States.
“If it is about renegotiating usmca, then let’s do it, but let’s do it now and take uncertainty from the system. Entrepreneurs cannot manage this level of uncertainty,” he told CBC News.
But Griffiths says that the production base that once existed in the United States is no longer here “. It was a long time ago replaced by one of the most efficient and cheap production processes in the world.
Even the threat of canceling the fact that the network has already shaken the markets, has eroded the trust and has pushed an almost unprecedented level of concern between one of the greatest sectors of the continent.
