Build More Cars Over Here—Trump to Japan Inc.
No, we shouldn’t get involved…but Automologist MAC just couldn’t help himself.
Now, we don’t usually do political stuff here at Automology but today’s headlines from President Trump’s Asia trip made me giggle more than just a little in its simplistic approach to world economics and the car industry in general. For years there has been a ballooning trade imbalance between the US of Americaland and various Asian countries. President Trump’s solution—well, it is easy, really, according to him—and I quote: “ Try building your cars in the United States instead of shipping them over. Is that possible to ask? That’s not rude. Is that rude? I don’t think so.”
Oh, you mean him?
In the same speech, he also thanked Japanese automakers for building new plants and expanding existing ones to the tune of USD1.6 billion, singling out Toyota and Mazda in particular; so, what is the true state of affairs for Japanese cars being sold in America? Well, at present, the US has a USD57 billion trade deficit—and Trump has made the reduction of this a major priority—but Japan’s top three car manufacturers have been investing in the US for years, and currently production of Japanese brands within the USA is at an all-time high.
In the 1980s, Trump may well have had a point, when some 3.5 million cars per year were exported from Japan into the American market. Last year, this figure had fallen to about 1.5 million, so not perfect but quite a turnaround. The picture gets a little better, as well, when you consider that the Japanese Manufacturers Association believes that some four million Japanese branded vehicles were put together in the US last year. When you include those vehicles put together in Mexico and Canada, a massive 75% of all Japanese cars are built in North America.
Blue-collar manufacturing has been leaving the more developed countries for years, migrating to regions with lower taxes, lower salaries and lower environmental controls, making it easier for a company to make a profit; after all, that is why we are in business. I am sure that if Americaland were to reduce taxation or relax environmental restrictions, then manufacturing would flow back in. I can’t help but think that Trump is missing the point, though, in another way. In the next few years, we will be moving over to transportation technologies that will disrupt the traditional manufacturers and perhaps he would be better served positioning the car industry in the US of A in front of that wave, rather than trying to catch the wave that is most decidedly passing.
Alright, who put the whoopie cushion on PM Abe’s seat?