Fighting back against free trade was one of the rallying cries that candidate Donald Trump used to fire up his base on the campaign trail.
But now it seems the U.S. automotive industry will do its best to give President Donald Trump an education on why withdrawing from the North American Free Trade Agreement would be a mistake, and it actually may cost the U.S. jobs in the auto sector.
With Trump threatening to withdraw from NAFTA and implement a 35 percent tariff on imported vehicles and parts, a number of groups and associations connected to the domestic auto industry are stepping up to try to explain why they feel that's a big mistake.
For starters, the Center for Automotive Research released a study claiming that such a policy would bring American consumers higher car prices, cause the U.S. new vehicle market to shrink and cost the nation at least 31,000 automotive jobs.
As NAFTA has taken shape over the past two decades, auto companies and their suppliers have seen the region's business evolve to take advantage of both the strengths and weaknesses of the countries involved. It is true that nine of the last 11 vehicle assembly plants announced for North America have gone to Mexico.
And suppliers—including numerous rubber-related firms—have followed suit by building up a burgeoning supply chain network to serve their customers. Many of these operations are high tech, while others are looking to take advantage of the wide wage disparity paid to Mexican workers, particularly for products that are labor intensive.
Nobody is arguing that NAFTA shouldn't be tweaked some. But one thing the trade agreement has done is create a production network that has blurred the lines of what is made where. For example, Mexican-made vehicles include about 40 percent U.S.-made parts on average, while cars assembled in the U.S. typically have 12 percent Mexican parts.
And the Original Equipment Suppliers Association says its members want to make sure their investments are protected, both in the U.S. and Mexico.
It's also unfair to say the auto supplier network has ignored the U.S. According to CAR, from 2006 to 2015 suppliers spent $44.4 billion to expand or build new factories in the U.S., compared to $3.4 billion invested in Mexico. And the Motor & Equipment Manufacturers Association points out that direct employment for auto parts producers in the U.S. has grown from 734,000 in 2012 to more than 871,000 currently.
So while Trump made hay as a candidate demeaning NAFTA, as president he might want to study the facts before scrapping the agreement altogether.