Our orange king has put 25 percent tariffs on imported cars and trucks. Wait! They are suspended for a couple months, but not for all countries. Not for China, of course. And maybe special consideration for parts made in Canada and Mexico. By the time you read this, who knows what the situation will be?

 

But a couple things are clear. While Trump and Miller and the rest of them blather on about bringing industry back to a bunkered USA, their broad and haphazard tariffs are leading straight to recession and job loss. Uncertainty will crash business investment. Intermediate goods that firms need will cost more, and they will cut back and lay workers off.

Tariffs are a tax that falls most heavily on goods bought by working families. So they will feel both the inflation and the job loss. Trump says “we” will need to suffer a little pain in the short run. Except not Apple or purchasers of I- phones or computers, they are exempt.

 

Blow Up Free Trade Fundamentalism

 

We should not mourn the end of so- called “free trade." Neoliberal economists, corporate Democrats and many NY Times pundits are howling about the end of the postwar trading system.

 

But we do not want the corporate trade model that is embodied in the North American Free Trade Agreement and the opening of trade with China. That has allowed multinational corporations to exploit foreign workers and environments, moving factories overseas and devastating working class communities in the US.

 

NAFTA and trade with China have led to a loss of 70,000 manufacturing plants in the US and millions of jobs. To quote Shawn Fain, president of the United Auto Workers, “Our union is hell bent on ending the free trade disaster of the last 30 years.”

 

It is workers who have borne the brunt of trade dislocations, not the auto companies. During the 1980’s the US Big Three – Ford, GM, and Chrysler (now Stellantis) – faced sharp competition from Japanese cars. Tariffs and quotas were enacted to stop imports and force foreign car companies to locate plants in the US. They built factories in non-union states.

 

Then, with NAFTA in the 1990’s, the automobile corporations moved many parts and assembly factories to Mexico, and a little bit to Canada, setting up complex supply chains. A typical car sold in the US today has parts that have crossed borders several times. Most have 40 percent or more “foreign content.”

 

The top 10 global automakers raked in $70 billion in profit in 2020. Now that has doubled, to $150 billion, as they raised prices 30 percent during the Covid crisis. Over the last 15 years, they have bought back $370 billion in stock from their wealthy investors.

 

Meanwhile, workers’ wages were stagnating until the recent UAW con- tract made significant gains. But those wage increases apply only to union workers, and the majority are non-union.

 

Now, 43 percent of car parts and assembly jobs are in Mexico, where workers average $3 an hour. That’s down from $6 an hour in 1993, before NAFTA. NAFTA opened up Mexican markets, especially corn, to US agribusiness, driving down prices and driving families off the land. Many headed north to maquiladora auto parts and assembly plants, pushing down wages.

 

Moving jobs to Mexico, in this race to the bottom, is still going on. One example: Stellantis recently moved Ram truck production from Warren, Michigan, to Mexico. Instead of paying $37 an hour, the company pays $3. They don’t lower prices, they just send more profit to Wall Street.

 

The UAW has calculated how much US factory capacity is sitting idle. Enough to build two million cars and hire 50,000 more workers. Every auto assembly job creates seven more in the supply chain.

 

So Tariffs

 

Would targeted tariffs on imported cars and trucks help bring autoworker jobs back? The UAW thinks so. (Just to be perfectly clear, Shawn Fain and the UAW, while in favor of auto tariffs, are opposed to 99 percent of the Trump agenda, including the detention of union members and protestors.).

 

But tariffs are only a first step – the trade agreement with Mexico and Canada (formerly NAFTA) must be renegotiated. It must include provisions for a minimum manufacturing wage way above $3 an hour. It must have a labor board to enforce labor organizing and bargaining rights.

 

In the long run, the UAW wants to be making the electric cars and batteries we need. That will require strong government action forbidding stock buybacks and excessive CEO compensation, and forcing the auto companies to invest and innovate.

 

Trump wants trade chaos and scapegoats. Corporations want free trade and profit. We want fair trade, so that all workers can make a living on a living planet.

 

Michael Righi is a retired economics professor and a member of the Retiree Advocate Editorial Board.