Howes: At election time, everyone wants to 'help' the auto industry
You know it’s election season because politicians once again are trying to run the auto industry and win votes doing it.
The Trump administration's proposal to freeze Obama-era emissions rules purports to help the automakers, their workers and auto-producing states in the run-up to the mid-terms. But automakers generally oppose the plan because they don't want to be seen opposing the more stringent emissions rules set by California and followed by a dozen other coastal states.
They also don't want an all-but-certain legal battle creating two sets of emissions standards in one country: one would apply to coastal states whose voters generally lean Democratic blue; the other would apply to red states the president needs to win re-election in 2020. And the confusing mess would drive costs higher.
The latest great idea to help the autos comes from U.S. Sen. Sherrod Brown. He's the Ohio Democrat who reflexively opposes just about anything associated with Republicans — unless it’s President Donald Trump slapping tariffs on imported steel, aluminum, autos and auto parts to score points with the industrial heartland.
Seeking another term in November, the good senator from the Buckeye State this week proposed using our money to give consumers a $3,500 discount on every American-built car and truck they buy. To pay for it, cleveland.com reports, Brown would tweak the Trump tax reform and double the tax rate on foreign profits.
Brown figures General Motors Co. wouldn’t be running northeast Ohio’s Lordstown Assembly on one shift (building a Chevrolet Cruze fewer and fewer American consumers want in an SUV-mad market) even as it plans to build its new Chevy Blazer SUV in Mexico. Not, that is, if corporate tax rates could be used to disadvantage foreign metal.
“I contend they'd re-tool the plant in Lordstown or elsewhere, and make the Chevy Blazer here,” he said. “I support the president's idea on these tariffs .... I think we need to do them in a way that works.”
What that might be isn’t exactly clear, partly because — as the White House and its trade sharpies are learning — today's auto industry employs hundreds of thousands of Americans. Their companies are domestic and foreign, union and non-union, and a major chunk of them are located in Trump Country.
Few states represent that conundrum more perfectly than Indiana, Kentucky and, especially, Ohio. It’s home to Honda of America’s massive operations in the central part of the state, GM’s Lordstown plant outside Youngstown and Ford Motor Co.’s Ohio Assembly in Avon Lake, as well as engine plants in Lima and Brook Park.
Question: Would buyers of an Ohio-built Honda get the discount? Or just the folks who buck the market trend and drop their dough on the union-built Cruze compact? Workers in both places are Buckeyes, after all, as Brown's proposed "American Cars, American Jobs Act" seems to recognize.
The bill would establish a "temporary program," his office says, offering buyers "a $3,500 deduction on a purchase or five-year lease of a qualifying new, American-made passenger vehicle. Qualifying vehicles must be assembled in the U.S. and contain at least 45 percent of materials from the U.S. and Canada. Nearly 100 vehicles, including all passenger vehicles made in Ohio, qualify for the program."
What a difference a few decades makes. American automakers claim roughly 45 percent of their home market, with the remaining balance served by a wide array of foreign automakers building cars, trucks and SUVs in the United States or importing them from their home countries.
The odd political bedfellows of Trump and Brown seek to redress the imbalance, to use tax and trade policy to force the Japanese, German and South Korean automakers to build more vehicles at American locations with American parts and employees.
Except the definition of "American-made" is changing. GM wants a tariff exemption for its Chinese-built Buick Envision SUV, arguing its comparatively small sales volumes in the United States cannot financially justify sourcing it from one of GM's U.S. plants. Brown's determination of what vehicles could qualify for his discounts opens a wide door for foreign brands to drive through.
And the assumption that "American-made" equals "union-made" essentially vaporizes under both Trump's auto tariffs and Brown's proposed legislation. That may not be what they want to hear at the United Auto Workers' Solidarity House, but it's an accurate reflection of where the industry is today:
It's not "American" or "foreign." It's both, courtesy of American consumers. For years, foreign-owned automakers operating in the United States sought an "American" imprimatur because of who they employ, where they do it and how much wealth they generate.
Meddlesome politicians looking for an edge this fall are happily obliging, giving new meaning to the old phrase, "I'm from the government and I'm here to help you."
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.