Donald Trump says he wants to see more vehicles made in America. This is a handy slogan and it could have been a real idea once.
The problem is that there is no such thing as in a Made car in America. And it hasn't been for years.
Because Canada and the United States signed a car pact in 1965, car manufacturers used a comparative advantage in both countries, so that the industry was more competitive, more efficient production and more affordable vehicles.
Experts say that the tariffs would effectively undo these advantages almost immediately.
“This is the same nonsense Trump that is not supported by documents that will harm (the American automotive industry worse than it hurts Canada,” said Flavio Volpe, head of the Automotive (APMA) part
Case study
Each vehicle made in North America is produced through a complex network of connected supply chains that use raw materials and suppliers of parts covering the entire continent.
Consider the rear team of a car made in North America.
This graphics were connected by APMA. He says he is based on actual contracts of members. The names of the companies have been edited to respect competitive confidentiality.
Each dot represents a different company, providing the material or part required to complete the rear team.
In order to break down the process even more, it all starts as a raw material in one country, it is shaped in the second part, and then moved again to be assembled into a wider component before it was finally assembled and finally sent to the customer.
The rubber is processed in Monterrey, Mexico. It is shaped in a connector in Iowa. This piece fits the control arm team made in Brampton, ONT. The control arm is folded as part of the rear suspension syndrome at Detroit. The rear team is sent to Windsor, Ont., To final assembly and finally sold in California.
New kerosene
You can make a similar chain for each part in any car.
The whole process is only feasible if these components can move through the boundaries without tariff.
It was a key element of a renegotiated North American trade agreement in 2018. When it was announced, Trump heralded a newly signed agreement with the Unity-Mxician Canada-Masic as a breakthrough for the American automotive industry.
“After approval, this will be a new dawn for the American automotive industry and American auto,” said Trump in 2018.
And yet, as he announced his last Salvo tariff, Trump's proclamation generally announced that his own trade agreement is a failure.
“I was also advised that the contracts concluded before the 9888 proclamation, such as changes in the United States free trade agreement and the United States agreement and the USSKI-CANDA (USMCA), did not bring sufficient positive results,” wrote the administration.
But withdrawing the status quo will have huge costs.
“No car is really produced in North America,” said Patrice Maltais from the Global Association of Automakers Canada.
He says that the nature of a complicated supply chain costs billions of dollars all over the continent and decades were built.
“You must basically disheve many of these supply chains and put away new ones, and it takes a lot of time and requires a lot of money.”
He says that a new production plant can cost from $ 2 billion to $ 10 billion.
“It's just a plant, you need to look at all supply chains for this plant.”
Even if car manufacturers actually agreed to move production to the USA, the construction would take years.
Experts say that the industry would record the tariffs
In the meantime, experts say that the industry would be covered by tariffs.
“You will feel it almost immediately,” said Jan Griffiths, former American director and founder of the Gravitas Detroit industry association.
During the campaign on 4 at Windsor, ONT. Liberal leader Mark Carney announced that if the prime minister is elected, a $ 2 billion “strategy fund” would be created to help employees affected by tariffs imposed by US President Donald Trump. The fund would help create a comprehensive network in the production of car components.
Instead of trying to use tariffs to force changes that would cost everyone, he says that Trump should offer a real path for Canada, Mexico and the United States.
“When it comes to renegotiating usmc, let's do it, but let's do it now and let's get uncertainty from the system. Business cannot cope with this level of uncertainty,” said CBC News.
But Griffiths claims that the production base, which once existed in the US, “is no longer here”. He has long been replaced by one of the most efficient and most profitable production processes in the world.
Even the threat of withdrawing that Network has already shocked markets, destroyed self -confidence and caused an almost unprecedented level of fears among one of the largest industries on the continent.