Ah, American politics. If you’re not already sick of reading about the 2016 elections, and after last night’s results, aren’t thoroughly shocked by it all; I’ve got one more gem of information for you.
Donald Trump could royally mess up the American auto industry.
I’m no political guru, I write about horsepower and CVTs and such, after all. However, I follow it enough to catch certain speeches, promises, and plans for the future. And I paid attention to Mr. Trump’s take on trade policies with other countries, namely Mexico.
While it seems like a decade ago now, it was only in 2015 that Trump vehemently promised to scrape the North American Free Trade Agreement, while also disagreeing with outsourcing American auto jobs to Mexico. Trump even vowed to block Ford Motor Co. from opening a new plant in Mexico.
And for the companies who already build their vehicles down there, now what? Now that Trump’s taken the top spot, what does that mean? Well, any number of things, but most likely higher car prices. In order to get their Mexican-made vehicles back into the USA, Trump’s agenda will call for border tariffs, which would in turn raise the overall price of vehicles we may no longer consider economic buys.
After last night’s presidential win for D. Trump, stocks already dropped for a number of manufacturers including Toyota, Nissan and Honda.
Mexico currently accounts for 20% of all vehicle production in North America. That number is set to reach a 50% auto production capacity in the next 5 years. At least, it was.
It’s clear that promoting homegrown manufacturing isn’t necessarily a bad thing (bringing auto maker’s factories back to US soil, I’m thinking Detroit could use a little boost…), what is bad is how heavily the auto industry currently relies on their relations with Mexico, and what it could mean for the near future.