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Even though the Trump administration does not listen to Canadian Foreign Minister Chrystia Freeland on the benefits of the North American Free Trade Agreement, perhaps the screams protests from their own industrial groups will awaken them to protectionism. 19659002] The question on today 's hearings in Washington is whether imported cars pose a threat to national security – and therefore worthy of the 25% import fee proposed by the president. American Donald Trump on cars and auto parts.
But some of the noisiest voices come from terrified American companies with the idea of becoming the next victims of Trump 's infamous commentary earlier this year: "Trade wars are good and easy to do. . win. "
When a country (United States) loses billions of dollars in trade with virtually every country with which it does business, trade wars are good and easy to win.For example, when we lose 100 billion dollars with a certain country and that they become cute, do not bargain anymore – we win big.
Not so easy
Under the banner of Alliance of Automotive Manufacturers, members of the country's automotive sector have written an open missive – "A Letter to President Trump from the Automobile" We are united as a united American automotive industry – car manufacturers, suppliers, national and international car dealers and automotive companies – to urge your administration to achieve fair trade through policies that have been won, as proponents of the protection plan claim. iste, the intention of tariffs, such as those that already exist on steel and aluminum, is to benefit American jobs, our economy or American technological leadership. American Industries and Workers
But the recent series of steel and aluminum tariffs imposed by the Trump administration did not exactly work as advertised. Rates on Uranium – Threatened Yesterday – Could Have Similar Effects
Like many of Trump's projects, from the Mexican Wall to recent in-camera talks with Russian Vladimir Putin, it's as if all the protectionist process had not been properly thought through.
Waving the flag? In a globally integrated auto industry, this Dodge Stealth at a Canada Day parade was distributed by Mitsubishi to the United States (Mark Blinch / Reuters)
its supporters, tariffs frighten foreign competition and allow domestic producers of these goods to prosper.
One deficiency is that even though individual producers of steel, aluminum or uranium from the United States may benefit from tariffs that drive up the price of foreign goods, these benefits are eclipsed by costs imposed on other firms or
US domestic manufacturers are not producing enough to replace the now tariffed imports and their costs are much higher.
Companies that take cheaper foreign steel and turn it into value added products with their own sophisticated technology were injured. Other examples include layoffs by a US manufacturer of nails and the American beer industry hit by rising costs of aluminum cans.
There is the old joke where the kid tells his teacher that "it all started when he hit me. "
The second flaw in Trump's protectionist strategy is that when he hits his trading partners, he seems to think that they will just stay there and take it.
Europe does They did not do it, they retaliate, and that's why companies like Harley-Davidson have been forced to move jobs overseas.
China does not have it And that is why a US senator at congressional hearings complained this week that US soybean and corn producers are earning less than it costs them to grow their crops while customers are looking elsewhere.
Move production to the outside of the country.
Waving the flag, take two? This American flag is currently on display in Germany at "Hamburg Harley Days". Harley-Davidson has moved some of its operations overseas due to customs duties between the United States and Europe. (Fabian Bimmer / Reuters)
In the case of the automotive sector, there is the highly integrated North American industry, where parts cross borders as if they were not even the.
The US industrial group is clearly worried about the impact of a tariff plan that would tear these business models apart, forcing members to find new ones. "Rising tariffs on cars and parts automobiles would be a mbadive tax for consumers who buy or maintain their vehicles – whether they are imported or manufactured in the country, "the letter writes.
Boycott of Danger
"These higher costs will inevitably lead to lower sales and the loss of US jobs, as well as to increased maintenance costs. and repairing vehicles that could delay the critical maintenance of vehicles. " 659002] Of course, that's not all.
The global footprint of the US auto industry is huge. And while few Chinese cars arrive in the United States, companies like Ford and General Motors manufacture and sell their brands in China.
A new study conducted for the Financial Times has come up with new details behind this threat, noting that "54% of the 2,000 respondents in 300 cities across China would" probably "or" stop " definitely "to buy American brand products" in case of trade war.
The International Monetary Fund said that a growing trade war would cost the global economy hundreds of billions of dollars.
The Ford shown here in Guangzhou, China could remain on the floor if Chinese consumers start (19659013) (Reuters)
According to industry experts like Flavio Volpe, a spokesman for the makers of Canada's auto parts, although the North American sector could possibly adapt to and new supply lines, threatened tariffs could result in a whole series of American car producers in recession.
"A 25 per cent duty on cars from Canada to the United States – and probably a counter-tariff on the United States in Canada – would cripple the industry," he said. [19659031] Follow Don on Twitter: @don_pittis
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