Auto tariffs were the big takeaway from this weekend’s meeting between President Trump and Chinese leaders. The aim was to de-escalate the trade war, but the real threat to American auto jobs isn’t Chinese tariffs on US-made cars. It’s Beijing’s plan to flood the US with cut-rate cars made with low-paid labor.
After the trade powwow, Trump advisers reported that China will drop or remove its punitive 40 percent tariff on autos imported from the US. Don’t pop the champagne corks: Removing Chinese tariffs on US autos will do almost nothing for our autoworkers.
The big three US automakers will tell you “we build where we sell.” They’ve moved operations to China, because the Asian giant is where the US was in 1925 in terms of car ownership, with plenty of first-time buyers. Ford reports, for example, that only 2 percent of its vehicles sold in China are made here.
Likewise, GM makes more cars in China than it does here, and the company sells more in China. The truth is that GM is more Chinese than it is American.
Back in the United States, the problem ahead is the coming wave of cheap Chinese-made cars. It’s a rerun of what Japan and South Korea did in the 1970s and ’80s. Their low-priced cars killed thousands of jobs in auto-producing states like Michigan, Indiana and Ohio.
Now five Chinese auto companies plan to sell in America within two years. Chinese auto workers make on average $11,000 a year, per Auto Express magazine.
No wonder Chinese negotiators say they want both sides to scrap all tariffs. It’s a trick. Fortunately, Trump doesn’t seem to be falling for it. “I’m a Tariff Man,” the president tweeted on Tuesday. He’s appointed a hard-line, pro-tariff US trade rep, Robert Lighthizer, to spearhead the Chinese negotiations.
It’s a sign Trump appreciates that tariffs are vital to staving off more disasters like the GM plant closings announced last month.
On Nov. 26, GM CEO Mary Barra blindsided the nation, announcing that the company is shuttering four US factories — including the Lordstown, Ohio, plant that makes the Chevy Cruze, and the iconic Detroit-Hamtramck plant that produces the Chevy Volt and other sedans.
The closings will lay off 3,300 production workers and 15 percent of GM’s white-collar workforce. Barra’s justification is that its sedans aren’t selling, and the closings are needed to “stay in front of a fast-changing market.” Investors agreed. GM stock soared.
Though longtime employees can move to other GM plants, many workers will end up in low-paying jobs or unemployed. In towns like Hamtramck, stores will be boarded up and rows of houses will be for sale.
In 2016, candidate Trump pledged to prevent such outcomes. Trumbull County, home of the Lordstown plant, went for Trump after giving President Barack Obama a 22-point margin in 2012.
Hearing GM’s grim announcement last week, Trump immediately called for tariffs. He pointed to the 25 percent tariff imposed on light trucks since 1964, which has guaranteed US dominance of the pickup and SUV markets ever since. “If we did that with cars coming in, many more cars would be built here,” the president tweeted, “and GM would not be closing their plants in Ohio, Michigan [and] Maryland.”
Trump also improved protections for US auto jobs when he renegotiated the trade pact with Mexico and Canada, announced last week. Pending congressional approval, the pact requires that at least 75 percent of a car’s value — meaning parts and labor — originate in North America for the car to be duty-free. That’s up from 62.5 percent under NAFTA.
The move will force companies that assemble in Mexico, like Nissan and Volkswagen, to use North American-made parts. To protect US wages, nearly half of all the parts will have to be made by workers earning at least $16 an hour — a jab at Mexico, which has some of the lowest auto wages in the world.
GM’s Barra is coming to Washington this week with mea culpas. But GM’s future as a company is largely in China and other new, foreign markets. Fortunately, Trump has American auto workers’ backs.
Betsy McCaughey is a former lieutenant governor of New York.