Donald Trump says he wants to see more vehicles in America. It is a handy slogan and may have been a practical idea.
The problem is that there is no more made in America. And there have been no longer for years.
Since Canada and the USA signed the autopakt in 1965, car manufacturers have used the comparative advantage in both countries to make the industry more competitive, production and vehicles more affordable.
Experts say that tariffs would undo these advantages almost immediately.
“It is the same Trump uninemity that is not supported by paper stuff that the American auto industry worse worse than Canada,” said Flavio Volpe, head of the automotive parts manufacturer association (APMA).
A case study
Each vehicle manufactured in North America is produced via a complex network of interconnected supply chains that use raw material and partial suppliers who span the entire continent.
Consider the back of a car produced in North America.
This graphic was put together by the APMA. It is said that it is based on the actual contracts of its members. Company names were edited to respect competitive confidence.
Each point represents another company that provides the material or part to complete the rear assembly.
In order to continue to break the process, everything begins as a raw material in a country, is shaped in one part in another and was then put together again in a wider component before it was finally put together and finally delivered to a customer.
Rubber is processed in Monterrey, Mexico. It is shaped into a connection in Iowa. This piece fits into the control arm assembly in Brampton, Ont. The control arm is compiled as part of the rear wheel arrangement in Detroit. The rear assembly is sent to the final assembly according to Windsor, Ontara, and finally sold in California.
The new NAFTA
You can create a similar chain for each part in every car.
The entire process is only feasible if these components can move over cross -border tariffs.
This was a key component of the newly negotiated North American free trade agreement in 2018. When it was announced, Trump announced the newly signed Canadian-Modified State-Mexico Agreement as a breakthrough for the American auto industry.
“After approval, this will be a new dawn for the American car industry and for the American car pork,” said Trump in 2018.
And yet when he announced his latest Salvo tariff, Trump’s proclamation essentially explained his own trade agreement to fail.
“I am also advised that agreements were concluded before the proclamation 9888, such as the revision of the United States’s free trade agreement and the United States and the agreement of the United States Mexico-Canada (USMCA), have not achieved sufficient positive results,” wrote the administration.
But the status quo is associated with enormous costs.
“No car is really made in North America,” said Patrice Maltais from the Industry Association Global Autoherers Canada.
He says that the continent -wide nature of the complicated supply chain cost billions of dollars and has built for decades.
“Basically, you have to disguise many of these supply chains and take new ones, and that takes a lot of time and it takes a lot of money.”
He says that a new production plant could cost between 2 and 10 billion US dollars.
“This is just the plant, then you have to see all the supply chains for this system.”
Even if the car manufacturers actually agree to bring production to the United States, the construction would take years.
Customs would undermine the industry, say experts, say
In the meantime, experts say that the industry would be packed by tariffs.
“You will feel it almost immediately,” said Jan Griffiths, former American car manager and founder of the Industry Association Gravitas Detroit.
During a day 4 campaign in Windsor, Ontario, the liberal leader Mark Carney announced that a 2-billion dollar “Strategic Response Fund”, when he was elected prime minister, was founded to help employees are affected by the tariffs imposed by US President Donald Trump. The fund would help create an All-Canadian network for the production of automotive components.
Instead of trying to use tariffs to force changes that would cost, Trump should offer a sustainable way for Canada, Mexico and the United States.
“When it comes to having negotiated Usmca, we will do it, but leave it now and let us remove the uncertainty from the system. Business people cannot cope with this uncertainty,” she told CBC News.
But Griffiths says that the production base that once existed in the USA “is no longer here”. A long time ago, it was replaced by one of the most efficient and cost -effective manufacturing processes in the world.
Even the risk of making it back that the network has already shaken the markets, eroded trust and triggered an almost unprecedented level of concern among one of the largest industries on the continent.
