Forget about the e-mails and the tweets. Trade between nations has become a vital issue during this year’s presidential campaign as Hillary Clinton and Donald Trump look for an advantage among voters.
Automakers, meanwhile, are struggling to stake out a position in the debate that both defends their position under the North American Free Trade Agreement and criticizes the proposed Trans-Pacific Partnership, a sweeping trade agreement with nations in the Pacific Rim region where the U.S. is trying to maintain influence.
At the same time, trade unions such as the United Auto Workers and United Steelworkers, which for four decades have criticized U.S. trade policies as job-killers, are scrambling to persuade members not to listen to Republican nominee Trump, who has developed a strong following among blue-collar voters.
Trump has made attacks on American trade practices one of the pillars of his yearlong quest for the White House. He unleashed a blistering attack on the notion of free trade during a recent visit to western Pennsylvania, where he also vowed to impose tariffs on foreign-made products, including new vehicles and auto parts.
Western Pennsylvania and neighboring eastern Ohio are heavily industrialized and have large numbers of white blue-collar voters in places such as Warren and Lordstown, OH, as well as around Pittsburgh. They have been skeptical of both Republican and Democratic candidates over the years.
Trump wooed those voters in a campaign statement: “Hillary Clinton is the enemy of working people and is the best friend Wall Street ever had. I will fight harder for American workers than anyone ever has.”
NAFTA in Trump’s Crosshairs
Throughout the campaign, Trump has highlighted the longstanding concerns of blue-collar workers about trade deals, particularly NAFTA, which has prompted billions of dollars in investment by U.S. and foreign automakers in Mexico’s auto industry.
“The predictions of people who opposed the agreement turned out to be far closer to what eventually came to pass,” political analyst Thomas Frank observes in his new book, “Listen Liberal: Or, Whatever Happened to the Party of the People,” a critique of liberal politics in general and the Democratic Party in particular. “NAFTA was supposed to encourage U.S. exports to Mexico; the opposite is what happened.”
For her part, Clinton has countered with warnings that Trump’s proposed tariffs and attacks on free-trade agreements would provoke a potentially ruinous trade war that could destabilize the global economy. At the same time, she has expressed concern about unfair trade practices that have left American workers at a disadvantage.
UAW President Dennis Williams insists Trump has nothing to offer workers looking for higher wages, greater job security and protection of health-care and pension benefits.
The International Brotherhood of Teamsters has withheld endorsing any presidential candidate until it learns more specifics about their positions on trade. “We're waiting to see the party platforms,” Teamsters spokesman Galen Munroe says.
The free-wheeling debate over trade has placed the auto industry’s practices at center stage in this year’s campaign. Trump has singled out Ford as an example of a company that has deserted the U.S. to open a factory with cheaper labor in Mexico.
Ford Scales Back Presence at Conventions; GM All-In
Ford executives starting with CEO Mark Fields deny Trump’s charges and have underscored the company’s displeasure by not making a contribution to the fund that will help pay for the Republican National Convention in Cleveland.
“Ford is not sponsoring the host committee for either the Republican or Democratic convention,” Ford spokeswoman Anne Hughes says in an e-mail. “This decision was made last year – prior to a nominee being determined by either party. We will have a presence at both conventions –engaging mostly through events with states where we have a manufacturing presence, like Michigan, Missouri and Ohio.”
General Motors is supporting both parties’ national conventions, calling them important events in the nation’s political process.
“These events allow us the opportunity to showcase our products and technology innovation to an important nationwide audience,” GM spokeswoman Laura Toole says in an e-mail. “While we won’t get into the specifics, we support both the RNC and DNC host committees at similar levels with in-kind donations of GM vehicles and cash contributions.”
Domestic automakers are closing ranks to defend NAFTA. Before a recent summit between President Obama, Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau, the American Automotive Policy Council, a lobbying group representing GM, Ford and FCA US, issued a statement defending NAFTA, which has been blasted by Trump, who also has criticized former President Bill Clinton for his role in implementing the agreement in the 1990s.
“The auto industry serves as a driving economic force in the integrated North American economy,” the statement says. “Automotive products account for 20% of total North American trade, making automotive goods the single largest category of traded products, and this sector supports millions of American, Canadian and Mexican jobs. Together we are more competitive than we ever would be apart.”
The Alliance also calls for eliminating customs rules that “impede efficient vehicle and auto-parts commerce between our three countries.” Changes to those regulations would “promote the competitiveness and continued growth of the North American industry, and the millions of jobs it supports across the continent.”
U.S. Automakers Support NAFTA, Leery of Pacific-Rim Version
Domestic automakers, however, have taken a more critical stance on the Trans-Pacific Partnership, which is supported not only by Obama but also by House Speaker Paul Ryan, a Republican.
“American automakers remain concerned about possible currency manipulation by TPP trade partners, including Japan,” AAPC President Matt Blunt says. “(The) AAPC, as well as economists from across the ideological spectrum, agree that the U.S. government should include enforceable rules prohibiting currency manipulation in its trade agreements to produce a positive economic impact on American manufacturing.”
It’s hard to predict just how decisive trade will be in this year’s campaign, given the changes in the U.S. economy over the past 40 years.
While Ronald Reagan deftly used support for quotas on Japanese automotive imports in his successful run for the White House in 1980, unions tried but failed to establish so-called “maquiladoras,” factories set near the U.S.-Mexican border that would receive exemptions from ordinary tariffs and duties.
Former Democratic Sen. Richard Gephardt, who built his campaign around fair trade, failed to attract many votes in 1988. The party’s nomination went to Michael Dukakis, who lost to Republican George H.W. Bush, who launched NAFTA negotiations with his Mexican and Canadian counterparts in 1990.
The agreement, which took effect Jan. 1, 1994, immediately eliminated tariffs on more than half of Mexico's exports to the U.S. and more than one-third of U.S. exports to Mexico. Most trade between the U.S. and Canada already was duty-free.
China’s alleged unfair trade practices have been a recurring theme for Trump as the real-estate developer effectively tapped the well of blue-collar resentment during his successful run through the GOP primaries.
“Candidates talk about manufacturing because of what it represents in the popular imagination: a source of stable, well-paying jobs, especially for people without a college degree. But that image is rooted more in nostalgia than in reality,” notes Ben Casselman, chief economics editor for FiveThirtyEight.com, a website that specializes in political news. “Manufacturing no longer plays its former role in the economy.”