6 ene. 2017

Donald Trump interventionist, protectionist, ignorant tweets now target Toyota!

Donald Trump keeps on Tweeting against US carmakers, probably intending to take credit after some like Ford, favour expanding production in the US than in Mexico... despite that responding to the market shifting its preferences backs to SUV (built in USA) instead of compact cars (mostly Made in Mexico). And Donald, the word is "tariff", not "border tax".

Or in the case of Toyota, complaining for they making more Corollas in Mexico, despite that production coming instead of Canadian and not US manufacturing. All this is not only unfair for US car companies, and Mexican jobs (isn't caring more for your own nationals jobs just chauvinism?), but it misses what really matters.

American car companies need Mexican production of cheaper cars and parts to be competitive in the World market. Mexico's lower wages are the only thing that allows GM, Ford and Chrysler to offer low margin products, that they need to be full-line manufacturers and that way using US plants to build millions of bigger, more expensive and higher margin vehicles, many of whose are also exported (to Mexico and China, among others).
What Trump will of course never take into account, is not how many jobs are opened in Mexico or other countries by the Detroit Three, but how many jobs have been preserved and created in the US because GM, Ford and Chrysler are profitable, something they wouldn't be if they couldn't build cars abroad. Without NAFTA, and being (rightly so) forced by the EPA to sell lower consumption vehicles like the Escort or the Cavalier in the 90's, American carmakers might have gone bankrupt even before they did, having to lose more money on those while being able to build less SUV that actually made a profit.
This child that is Donald Trump is, even before taking office, acting as a President before taking office. He intends just to pressure US companies into taking decisions that at a first glance seem to "save American jobs". Even if you like that protectionist rhetoric (which I think is misguided), that is not the way a democracy is supposed to work!

If most Americans want to take their country out of global markets, it has to be done gradually and through Congress, not via Twitter. I think that is not the way to manage a modern economy, even less that of the US, that is perfectly placed to take advantage of its brainpower, radiating impressive new technologies to the rest of the world, instead of relying on putting stuff together.

Finally, I don't mean that no measure has to be taken at all. I think that there is a limit to opening markets and that efforts like the TPP can go way over what is convenient for industrialized economies. Again, that has to be democratically discussed.

And I'm also in favour of reciprocity for those countries that restrict Free Trade, or get into Dumping. China, for instance, puts high tariffs on US imports, and also requires foreign carmakers to form joint ventures to produce in the country. That is unfair, and accepting it when you have plenty of negotiating power (like the US) is idiotic.

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