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Denis Ulicny
Senior Industry Analyst
WardsAuto
dulicny@wardsauto.com |
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| What will Trade and Automotive Policy Look Like in the Trump Administration | |
| A new President and a new administration always bring expectations of change and a level of uncertainty, and the Trump administration is clearly no exception. Individuals and companies brace to learn policy specifics, and the potential impact they might have.
President Trump engaged the auto industry early on - including GM CEO Mary Barra as part of his Strategic and Policy Forum, and meeting with Barra and the chiefs of Ford and FCA, as a group, at the White House. The two policy areas of most interest to the automotive industry are trade and regulation.
TRADE: The new President has been vocal early in his administration (as he was on the campaign trail) in voicing displeasure with the NAFTA agreement, especially as it pertains to U.S. trade with Mexico. The other significant target of his aggressive rhetoric has been China. At one point, the President threatened a 45% import tariff on Chinese goods, and a 35% border tax with Mexico - both of which were met with significant pushback by both governments. An proposed 20% tax on Mexican goods to pay for a border wall was enough to cause Mexico’s president to cancel a planned trip To Washington. These swift retaliatory statements, coupled with input from influential CEOs, has caused President Trump to make more tempered comments in recent days.
Yesterday, the president said he would not pull the U.S. out of NAFTA – at least not yet – and instead would begin renegotiating its terms with Canada and Mexico. China’s president recently expressed a hopeful tone that the two countries could find common ground going forward after what would appear to have been a more conciliatory phone conversation with his U.S. counterpart. And the president has largely gone silent on a third trading partner, Japan, since the Prime Minister of Japan’s recent visit.
Many U.S. based global companies have a great deal of exposure in all 3 of these markets, and others for that matter – and as it pertains specifically to the automotive industry, large manufacturers and suppliers alike leverage these large markets in an effort to be competitive on a GLOBAL basis, while maintaining the overall health of their organizations. Any drastic unilateral action on trade in these markets would simply be bad for business, almost immediately met with retaliatory measures, and therefore, highly unlikely. Without question, the new administration will seek opportunities to benefit the U.S., but it won’t be done at the expense of the global economy.
REGULATORY POLICY: An area where the new administration appears to be aggressive and determined is regulatory policy. According to an article in the Washington Post, the Trump administration has utilized the Congressional Review Act, which allows legislators to overturn regulations within 60 days of enactment 37 times during the president’s first ten days in office. Previously, from the Clinton administration to the Obama administration, the most this tool had been used was 26 times during the 112th Congress (Obama administration) - a 2 year period. The auto industry has always been heavily regulated, be it from an environmental standpoint, or a safety standpoint. The Trump administration is clearly of the belief that regulations hurt the overall economy. There is some data supporting this notion, such as The Competitive Enterprise Institute’s claim that the average household spends $14,678 per year on regulatory barriers…this amounts to 23% of average U.S. household income.
The new President has stated that he would like to eliminate 2 regulations for every new regulation adopted and, in fact, signed an executive order to that affect. In return, the administration is being sued by The Natural Resources Defense Council (NRDC), the Communications Workers of America (CWA) and Public Citizen, according to The Hill. President Trump stated that in all, he would like to reduce regulations by 75 percent. That number may well prove to be unrealistic, but the message is clear…that all regulations, old and new, will face substantial scrutiny. It remains to date unclear what stance the new administration will take relative to regulatory policy and the auto industry, but for decades, regulations have fueled innovation and vice versa. Will future m.p.g. and CAFÉ standards be lessened, or will safety mandates be less demanding? What has become apparent, is that the new President will be listening not only to his inner circle but to major OEM executives as well.
Denis Ulicny |
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 | | | | A WardsAuto forecast calls for U.S. automakers to deliver 1.44 million light vehicles in April. The forecasted daily sales rate of 55,531 over 26 days marks a 0.6% improvement from like-2016 (27 days). The 3.1% DSR decline from March (27 days) is better than the 3-year average March-to-April change, -9%. The report puts the seasonally adjusted annual rate of sales for the month at 17.1 million units, well above last month’s 16.5 million, but below year-ago’s 17.3 million. Read More |
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 | | | | Getrag brought several compelling new technologies to the Magna fold in last year’s acquisition, but Magna’s powertrain engineers have been busy on many fronts. For instance, the eTelligentDrive system makes EVs a whole lot more fun to drive Read More |
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