Saturday, January 21, 2017

Trump's Tweet Threats Against US Car Makers Are Backfiring

                                           Good Day World!

Since day one, Trump has assured his followers that he would bring back American manufacturing jobs. 

He claimed the big corporations would whither when he told them he'd hit them with a 35% tax for going out of the country with their jobs.

Guess what? Trumps tough tweets about Mexican imports have had an unexpected result. Instead of driving companies away from doing business in Mexico, the opposite may happen.

Here's why; Mexico's peso has taken a dive because of Trump's terrible tweets. That now means it's even cheaper to do business in Mexico than ever before.

Several high-level auto industry officials recently told NBC News that the sharp slump in the price of the peso could offset any import tariffs, leading them to consider new manufacturing options in Mexico. 

This unexpected consequence was highlighted by former U.S. Treasure Secretary Lawrence Summers during a speech last week at the World Economic Forum in Davos, Switzerland.

In essence the experts say the decline of the peso is a dagger at Ohio.

This is a good example of class populism being counterproductive for those in whose name it is offered as a policy regime.

It gets worse.

There was a study released last week by the Center for Automotive Research (CAR) that warned of the possibility of eliminating or sharply scaling back on NAFTA could seriously impact the U.S. auto industry, especially in the Midwest, where most of the manufacturing takes place.

"Counter to the incoming Trump administration's goal of creating manufacturing jobs, the withdrawal from NAFTA or the implementation of punitive tariffs could result in the loss of 31,000 U.S. jobs," said a summary of the report by CAR, a highly respected automotive research firm in Ann Arbor, Michigan.
As a result, manufacturers can save substantially by using Mexico as a central production base for global distribution.
Remember Trump's tweets hailing Ford's decision to cancel plans for a new Mexican assembly plant? The Detroit auto maker actually did not reverse its plan to move small car production to Mexico.
The Focus model will simply be built in another, existing and underutilized Ford plant in Hermosillo.
Finally, despite a series of announcements about new U.S. factory investments in recent weeks, there has been little actual movement of manufacturing back to the U.S. — but for a small axle line by General Motors.
To all of those Americans who thought Trump was going to invigorate manufacturing in the U.S., this is going to be their first major disappointment with his regime.
Stay tuned. More will come.
Time for me to walk on down the road...

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