This is not what was promised by the President.
Recent financial news for an iconic American automaker, Ford Motor Company, paints a bleak picture:
Moody’s downgraded Ford‘s credit rating to one notch above junk bond status Wednesday and warned that it could be further cut as the Detroit automaker struggles overseas and invests an estimated $11 billion on a turnaround plan.
The second-largest U.S. auto manufacturer is facing weakening profit margins in North America, a retrenching business in China, and losses in South America and Europe, at least some of which could continue to worsen, Moody’s said in a research note.
Moody’s said the company’s debt rating could be cut even further, to non-investment grade, by the middle of next year if it doesn’t make “clear progress” on its turnaround plan.
As can be seen, sales in China, South America, and Europe are weakening. A big part of why this is happening has to do with the trade war that Trump has started with these foreign markets. This article explains further:
Responding to the latest tariffs levied by the Trump administration, China announced 25 percent tariffs on $16 billion in U.S.-made goods. That included the roughly $10 billion in automobiles that Chinese motorists were expected to purchase this year.
“We will continue to export from the U.S. some of our great products,” Ford said in a statement provided to CNBC in response to questions about the new tariffs. “However, with limited pricing capabilities, we will be lowering volume on some of our exports.”
Unless Ford can find alternative markets for exports like the Mustang, the impact of such a move could be the loss of American jobs.
But, it isn’t just Ford that is struggling. General Motors is struggling, too.
GM(imposed tariffs on those imports. That includes domestic steel and aluminum, which are more expensive without the threat of lower-priced imports.) cited rising commodity prices. Steel and aluminum prices have gone up since the Trump administration
This points to another issue with the trade war: it is raising the prices of commodities and auto parts, which automakers need to buy for the cars they build.
US automakers are caught in quite the financial vice: weakening international sales and higher costs for production. Both are due, in large part, to Trump’s trade war.
The President of the United States is a former reality TV star and golf course owner. We need to begin to understand as a country that he does not have any expertise in the realities of world trade. Instead, Trump has based his entire trade policy on the right wing tactic of scapegoating foreign countries for the economic problems of American workers, whether that scapegoat is immigration or trade.
And on, and on, and on. In every Midwestern State, there is news of how Trump’s trade war is hurting local farms and businesses.
But here’s what’s even worse: Trump’s trade war is all based on a lie. No matter what nonsense Donald Trump spews to defend his trade war, the truth is that America was not getting killed by trade. American companies have been doing very, very well. The S&P 500 has tripled over the last 9 years.
It is workers who have not been doing well. And it hasn’t been because of trade. The problem has been that workers are being hurt by anti-union corporate executives and the politicians they have bought.
Since Ronald Reagan started the attack on unions in 1981 when he busted the air traffic controller strike, union membership has steadily declined, and with it the share of profits going to workers has declined.
The economy has been changing for decades, and union jobs in manufacturing are being replaced by non-union jobs in service, technology, etc. And this changing economy is not due to trade. It is due to technology. In fact, 85% of US manufacturing job losses have been attributable to automation, not trade.
American workers need more unions, not less trade.