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Analysis: President Trump’s Claims About NAFTA and the U.S. Auto Industry

(Salvador Rizzo – Washington Post)

“We lost thousands of factories and millions of jobs because of NAFTA — thousands. Think of it: Thousands of factories, millions of jobs. We’re turning it around. Already, Chrysler is coming back with auto plants. Many companies are now in Michigan, Ohio, different places, Pennsylvania. They’re building beautiful, brand-new auto plants. Nobody thought they’d ever see that happen.”

— President Trump, in remarks at the White House, April 12, 2018

NAFTA transformed the U.S. auto industry by lifting Mexico’s restrictive trade barriers and enabling automakers to spread out their supply chain and production facilities across North America. This means Canada, Mexico and the United States operate as an integrated auto market, with all three countries generally getting a piece of the action when a car is sold.

Most economists see this as an efficient setup that keeps automakers based in North America globally competitive. For example, relatively low-cost labor in Mexico helps North America compete with low-cost labor in Asia.

But Trump complains that NAFTA’s costs — “thousands of factories and millions of jobs” — have been too steep for U.S. workers. He then goes on to say that things are picking up now that he’s president, with new auto plants cropping up in several states along the Rust Belt. Click here to read more.