Inside Out | Trump’s myopic trade agenda to protect the US car industry will cost the economy dearly
The US car industry may have generated US$100 billion in sales and 7.3 million jobs in 2017, but the advantages of the services sector that employed 90 million people and generated US$230 billion remain politically uncounted and ignored
Have you noticed how much time and attention trade negotiators pay to the car industry? How so much of the smouldering stress and arm-wrestling around negotiations converges on cars and car parts?
Yes, they account for a big share of global goods trade – around 9 per cent of all merchandise trade, according to the World Trade Organisation. And yes, this trade concentrates on a small number of very important economies like the US, Japan, Germany.
But surely the attention is out of all proportion to the importance of the car business in our overall global economy two decades into the 21st century? As a correspondent in the US’s Atlantic magazine eloquently put it, surely it is all about “pistons and brute force in an era of silicon and software”?
Trump’s “America First” trade agenda seems to be all about the motor industry – whether in the Korus trade deal with South Korea, in the US trade conflict with Germany, in efforts to secure a Japan FTA, or, most nail-bitingly in the renegotiation of the 24-year-old North American Free Trade Agreement (Nafta) into a shiny new US-Mexico-Canada Agreement (USMCA).
It is true that lots of the scrummaging over a new Nafta deal was over softwood timber and Canada’s meticulously protected dairy sector, but nothing compared with the animus over autos. It is hard to imagine the nit-picking that must go into making sure that the local content value in a car rises from 62.5 per cent to 75 per cent or that between 40-45 per cent of the workers employed earn at least US$16 an hour. But it must surely be marvellous for jobs in customs inspection.